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Graphic Packaging (GPK)
NYSE:GPK
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Graphic Packaging
(NYSE:GPK)65Neutral
Positive Factors
Sales and Innovation
Innovation-driven sales met the target of $200 million for the year, showcasing the company's ability to achieve its goals.
Negative Factors
Financial Performance
A negative share price reaction is expected due to EBITDA hitting the lower end of the guidance range and falling short of consensus.
Market Competition
The biggest threat to GPK's long-term value is the potential entry of a new competitor in the US boxboard market.
Graphic Packaging (GPK) vs. S&P 500 (SPY)
Market Cap
$8.01B
Dividend Yield1.5%
Average Volume (3M)2.48M
Price to Earnings (P/E)12.4
Beta (1Y)0.80
Revenue Growth-6.59%
EPS Growth-7.81%
CountryUS
Employees23,000
SectorConsumer Cyclical
Sector Strength53
IndustryContainers & Packaging
Share Statistics
EPS (TTM)2.15
Shares Outstanding300,214,480
10 Day Avg. Volume2,044,348
30 Day Avg. Volume2,475,180
Financial Highlights & Ratios
PEG Ratio2.03
Price to Book (P/B)N/A
Price to Sales (P/S)0.91
Price to Cash Flow (P/CF)4.10
P/FCF Ratio7.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$31.10Price Target Upside20.40% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering8
Graphic Packaging Business Overview & Revenue Model
Company DescriptionGraphic Packaging Holding Company (GPK) is a leading provider of paper-based packaging solutions for a wide range of products to food, beverage, foodservice, and other consumer product companies. The company operates in the packaging industry, with a focus on designing innovative and sustainable packaging solutions that meet the needs of its clients. Its core products include folding cartons, cups, food containers, and other paper-based packaging materials. With a strong commitment to sustainability, Graphic Packaging emphasizes the use of renewable and recyclable materials in its offerings.
How the Company Makes MoneyGraphic Packaging makes money primarily through the sale of its paper-based packaging products to a diverse customer base, including some of the world's largest consumer brands in the food, beverage, and foodservice industries. The company's revenue model is centered around manufacturing and supplying customized packaging solutions that meet specific client needs, delivered at scale. Key revenue streams include long-term contracts with major corporations, which provide a stable and recurring income. Additionally, Graphic Packaging benefits from economies of scale and efficient production processes, enhancing its profitability. Strategic acquisitions and partnerships also play a significant role in expanding its market reach and capabilities, thereby driving its earnings.
Graphic Packaging Financial Statement Overview
Summary
Graphic Packaging exhibits solid profitability and improving equity positions, though high leverage poses a risk. Strong cash flow generation supports operational stability, but revenue volatility remains a concern.Income Statement
Graphic Packaging has exhibited strong profitability with consistent gross and net profit margins. The gross profit margin has been stable, around 100% due to the total revenue equating to gross profit in the latest year, suggesting a data anomaly. The net profit margin saw improvement from 2.5% in 2020 to 7.5% in 2023, indicating enhanced efficiency. However, revenue growth has been volatile, with a decline in 2023 compared to 2022, reflecting potential market challenges.75
Positive
Balance Sheet
The company's debt-to-equity ratio remains high, at 1.88 in 2023, which could pose a leverage risk. However, the return on equity improved significantly to 26% in 2023 from 11.7% in 2020, indicating better utilization of shareholder funds. The equity ratio increased to 24.9% from 18.2% in 2020, suggesting a stronger equity position.68
Positive
Cash Flow
Graphic Packaging's cash flow performance shows resilience with a positive trend in operating cash flow. Free cash flow has grown significantly, reversing the negative trend seen in 2021 to a positive in the following years, indicating improved cash generation. The operating cash flow to net income ratio is robust, reflecting strong cash conversion, although free cash flow growth has been inconsistent.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 8.81B | 9.43B | 9.44B | 7.16B | 6.56B | Gross Profit |
| 1.96B | 2.19B | 1.83B | 1.07B | 1.10B | EBIT |
| 1.12B | 1.33B | 906.00M | 550.00M | 524.30M | EBITDA |
| 1.12B | 1.95B | 1.60B | 1.04B | 909.90M | Net Income Common Stockholders |
| 658.00M | 723.00M | 522.00M | 204.00M | 167.30M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 157.00M | 162.00M | 150.00M | 172.00M | 179.00M | Total Assets |
| 11.14B | 11.18B | 10.33B | 10.46B | 7.80B | Total Debt |
| 5.18B | 5.62B | 5.25B | 5.79B | 3.64B | Net Debt |
| 5.03B | 5.46B | 5.10B | 5.62B | 3.47B | Total Liabilities |
| 8.13B | 8.39B | 8.18B | 8.56B | 5.96B | Stockholders Equity |
| 3.01B | 2.78B | 2.15B | 1.89B | 1.42B |
| Cash Flow | Free Cash Flow | |||
| 840.00M | 340.00M | 541.00M | -193.00M | 199.30M | Operating Cash Flow |
| 840.00M | 1.14B | 1.09B | 609.00M | 845.60M | Investing Cash Flow |
| -342.00M | -1.02B | -435.00M | -2.39B | -668.70M | Financing Cash Flow |
| -489.00M | -106.00M | -666.00M | 1.78B | -152.00M |
Graphic Packaging Technical Analysis
Negative
25.83
Price Trends
27.06
Negative
28.08
Negative
28.03
Negative
Market Momentum
-0.26
Positive
36.34
Neutral
18.08
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GPK, the sentiment is Negative. The current price of 25.83 is below the 20-day moving average (MA) of 26.66, below the 50-day MA of 27.06, and below the 200-day MA of 28.03, indicating a bearish trend. The MACD of -0.26 indicates Positive momentum. The RSI at 36.34 is Neutral, neither overbought nor oversold. The STOCH value of 18.08 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GPK.
Graphic Packaging Risk Analysis
Graphic Packaging disclosed 13 risk factors in its most recent earnings report. Graphic Packaging reported the most risks in the “Macro & Political” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Graphic Packaging Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $19.14B | 23.85 | 18.28% | 2.39% | 7.45% | 5.43% | |
70 Outperform | $8.36B | 17.98 | 24.39% | 1.57% | -5.35% | -13.51% | |
68 Neutral | $4.70B | 28.96 | 7.22% | 4.40% | -6.93% | -65.66% | |
67 Neutral | $4.98B | 18.52 | 42.39% | 2.45% | -1.75% | -21.15% | |
65 Neutral | $8.01B | 12.37 | 21.85% | 1.50% | -6.59% | -7.81% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% | |
43 Neutral | $14.90B | ― | 67.59% | 1.53% | -15.64% | -186.66% |
* Consumer Cyclical Sector Average
Performance Comparison
GPK
Graphic Packaging
25.83
0.19
0.74%
BALL
Ball
51.03
-11.98
-19.01%
PKG
Packaging
202.27
22.35
12.42%
SEE
Sealed Air
31.03
-3.49
-10.11%
SON
Sonoco Products
46.27
-8.24
-15.12%
BERY
Berry Global Group
70.65
17.39
32.65%
Graphic Packaging Earnings Call Summary
Earnings Call Date: Feb 4, 2025 | % Change Since: -5.11% | Next Earnings Date: Apr 29, 2025
Earnings Call Sentiment Neutral
Graphic Packaging demonstrated strong financial stability and strategic progress, particularly in innovation and sustainability, despite facing volume and pricing challenges, as well as foreign exchange headwinds. The company showed resilience in a difficult market environment with a positive outlook for 2025.Highlights
Strong Financial Performance
Graphic Packaging reported full-year 2024 sales of $8.8 billion, adjusted EBITDA of $1.7 billion, and adjusted EPS of $2.49. Fourth quarter sales were $2.1 billion with adjusted EBITDA at $404 million and adjusted EPS of $0.59.
Successful Divestiture and Capital Reallocation
Successfully divested the Augusta Georgia bleached paperboard facility, reallocating capital more effectively, and reducing open market bleached paperboard sales exposure.
Innovation and Sustainability Initiatives
Delivered $205 million in innovation sales growth for 2024, with a focus on sustainable packaging solutions and significant investments in renewable energy.
Dividend Increase
The Board of Directors approved a 10% increase in the quarterly dividend to $0.11 per share, reflecting strong business performance and declining capital needs.
Lowlights
Volume and Pricing Challenges
Full year volumes were down approximately 1% with a price decline of about 2% in the fourth quarter and throughout much of 2024, impacting overall sales performance.
Foreign Exchange Headwinds
A strong U.S. dollar presented a $24 million sales headwind for the full year and a $5 million adjusted EBITDA headwind in the fourth quarter.
Continued Market Challenges
Challenging market conditions, including customer destocking and inflation pressures, affected consumer purchasing behaviors and volume growth.
Company Guidance
During the call, Graphic Packaging Holding Company provided comprehensive guidance on their financial performance for the fiscal year 2024 and the outlook for 2025. For 2024, the company reported sales of $8.8 billion, an adjusted EBITDA of $1.7 billion, with margins at 19.1%, and an adjusted EPS of $2.49. In Q4 alone, sales were $2.1 billion, with an adjusted EBITDA of $404 million, margins at 19.3%, and an adjusted EPS of $0.59. Looking ahead to 2025, the company anticipates low single-digit sales growth, driven largely by expected innovation sales growth of at least 2%. They foresee a continued focus on innovation and execution, particularly in sustainable packaging, with anticipated adjusted EBITDA margins remaining stable around 19%. Additionally, the company plans to reduce capital expenditures from $1.2 billion in 2024 to $700 million in 2025, reflecting a shift from transformational investments to maintaining growth and operational efficiency. They also highlighted a 10% increase in the quarterly dividend, effective April 2025, as part of their capital allocation strategy.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.