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Smurfit Westrock (SW)
NYSE:SW
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Smurfit Westrock
(NYSE:SW)72Outperform
Positive Factors
Operational Improvements
Strong progress in improving margins without losing market share in the US and achieving pricing benefits in Brazil suggests effective management strategies.
Synergy and Optimization
Management reiterates its confidence in capturing identified $400m in synergies by year-end 2025.
Negative Factors
Earnings and Sentiment
The conference call created some confusion around earnings, direction, and priorities, impacting investor sentiment.
Smurfit Westrock (SW) vs. S&P 500 (SPY)
Market Cap
$27.01B
Dividend Yield3.12%
Average Volume (3M)3.62M
Price to Earnings (P/E)63.5
Beta (1Y)1.03
Revenue GrowthN/A
EPS GrowthN/A
CountryUS
Employees47,000
SectorConsumer Defensive
Sector Strength73
IndustryContainers & Packaging
Share Statistics
EPS (TTM)1.22
Shares Outstanding520,444,300
10 Day Avg. Volume3,212,720
30 Day Avg. Volume3,617,281
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)3.53
Price to Cash Flow (P/CF)9.70
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$62.18Price Target Upside33.18% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering10
Smurfit Westrock Business Overview & Revenue Model
Company DescriptionSmurfit Westrock (SW) is a leading global provider of paper-based packaging solutions. The company operates across various sectors, including consumer goods, e-commerce, industrial, and corrugated packaging. With a strong emphasis on sustainability, SW offers a wide range of packaging products, such as corrugated containers, folding cartons, and innovative packaging designs tailored to meet the needs of its diverse clientele.
How the Company Makes MoneySmurfit Westrock generates revenue primarily through the manufacturing and sale of paper-based packaging products. The company's key revenue streams include the production of corrugated containers and folding cartons, which are sold to businesses in sectors such as consumer goods, e-commerce, and industrial markets. Additionally, SW benefits from long-term partnerships with major corporations and retailers, enabling consistent demand for its sustainable packaging solutions. The company's focus on innovation and custom packaging designs also plays a crucial role in attracting and retaining clients, thereby driving sales growth.
Smurfit Westrock Financial Statement Overview
Summary
Smurfit Westrock demonstrates solid profitability with a stable gross profit margin and efficient cash generation. However, the company faces a slight revenue decline and needs to improve free cash flow relative to net income.Income Statement
Smurfit Westrock's income statement reflects a stable gross profit margin of 33.6% for 2023, with an EBIT margin of 11.1% and a net profit margin of 6.7%. However, the company experienced a revenue decline of 2.8% from the previous year, suggesting challenges in maintaining sales growth. The EBITDA margin stands at a healthy 16.6%, indicating strong operational efficiency.75
Positive
Balance Sheet
The balance sheet shows a moderate debt-to-equity ratio of 0.61, indicating a balanced capital structure. The return on equity (ROE) is 13.6%, which is a positive indicator of shareholder returns. However, the equity ratio is 44.0%, suggesting a reasonable level of leverage but room for improvement in asset financing through equity.70
Positive
Cash Flow
The cash flow statement reveals a strong operating cash flow to net income ratio of 2.0, signifying efficient cash generation. The free cash flow growth rate is 29.4%, highlighting improvements in cash management. However, the free cash flow to net income ratio is only 0.9, suggesting limited free cash flow relative to net income.72
Positive
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 23.88B | 12.46B | 12.81B | 10.11B | 8.53B | 10.14B | Gross Profit |
| 4.87B | 4.19B | 4.06B | 3.09B | 2.87B | 3.37B | EBIT |
| 741.66M | 1.38B | 1.44B | 1.07B | 891.00M | 990.23M | EBITDA |
| 778.66M | 2.06B | 2.23B | 1.80B | 1.78B | 1.57B | Net Income Common Stockholders |
| 295.19M | 837.89M | 1.01B | 768.78M | 670.32M | 533.20M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 983.81M | 983.81M | 777.00M | 869.00M | 891.00M | 0.00 | Total Assets |
| 13.96B | 13.96B | 12.48B | 11.71B | 10.29B | 0.00 | Total Debt |
| 3.75B | 3.75B | 3.78B | 3.75B | 3.28B | 0.00 | Net Debt |
| ― | ― | 3.00B | 2.88B | 2.38B | 0.00 | Total Liabilities |
| 7.80B | 7.80B | 7.44B | 7.32B | 6.51B | 18.00M | Stockholders Equity |
| 6.15B | 6.15B | 5.03B | 4.38B | 3.77B | 0.00 |
| Cash Flow | Free Cash Flow | ||||
| 259.91M | 727.35M | 562.00M | 371.00M | 733.00M | 0.00 | Operating Cash Flow |
| 1.42B | 1.68B | 1.45B | 986.00M | 1.25B | 0.00 | Investing Cash Flow |
| -1.96B | ― | -967.00M | -1.00B | -498.00M | 0.00 | Financing Cash Flow |
| 2.91B | ― | -496.00M | -14.00M | -64.00M | 0.00 |
Smurfit Westrock Technical Analysis
Negative
46.69
Price Trends
52.99
Negative
51.65
Negative
48.52
Negative
Market Momentum
-0.84
Positive
30.10
Neutral
10.22
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SW, the sentiment is Negative. The current price of 46.69 is below the 20-day moving average (MA) of 52.95, below the 50-day MA of 52.99, and below the 200-day MA of 48.52, indicating a bearish trend. The MACD of -0.84 indicates Positive momentum. The RSI at 30.10 is Neutral, neither overbought nor oversold. The STOCH value of 10.22 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SW.
Smurfit Westrock Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $27.01B | 63.50 | 13.63% | 3.12% | ― | ― | |
72 Outperform | $29.65B | 35.83 | 6.82% | 3.28% | -1.57% | 84.85% | |
71 Outperform | $19.14B | 23.85 | 18.28% | 2.35% | 7.45% | 5.43% | |
68 Neutral | $4.70B | 28.96 | 7.22% | 4.35% | -6.93% | -65.66% | |
67 Neutral | $4.98B | 18.52 | 42.39% | 2.34% | -1.75% | -21.15% | |
63 Neutral | $20.85B | 13.27 | -10.88% | 7.48% | 1.13% | 11.50% | |
60 Neutral | $2.77B | 16.35 | 9.97% | 3.82% | 6.88% | -39.67% |
* Consumer Defensive Sector Average
Performance Comparison
SW
Smurfit Westrock
46.69
6.03
14.83%
GEF
Greif Class A
54.63
-6.61
-10.79%
IP
International Paper Co
51.30
16.91
49.17%
PKG
Packaging
202.27
23.47
13.13%
SEE
Sealed Air
31.03
-3.74
-10.76%
SON
Sonoco Products
46.27
-8.03
-14.79%
Smurfit Westrock Earnings Call Summary
Earnings Call Date: Feb 12, 2025 | % Change Since: -12.27% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a strong performance for Smurfit Westrock with successful integration and synergy achievements. However, challenges such as restructuring impacts, volume declines in Latin America, and external risks like energy price volatility and potential tariffs remain concerns.Highlights
Strong Fourth Quarter Performance
Reported adjusted EBITDA of USD 1.166 billion with a margin of 15.5% for Q4. Full-year adjusted EBITDA was USD 4.706 billion, meeting guidance.
Successful Combination of Smurfit Kappa and Westrock
The merger created a global leader in sustainable packaging with over 500 converting facilities and 62 mills, and net sales over $31 billion.
Synergy Program Progress
Confident in meeting or exceeding $400 million in synergies by the end of the current year, with additional opportunities identified.
North America Segment Performance
Delivered sales of $4.6 billion with an adjusted EBITDA of $710 million and a margin of 15.4%.
Capital Allocation Strategy
CapEx for 2025 planned between $2.2 billion to $2.4 billion, with a focus on maintaining a strong investment-grade credit rating.
Lowlights
Restructuring and Streamlining Challenges
Over 1,000 employees have been or will be leaving the company as part of the restructuring efforts.
Volume Declines in Latin America
Corrugated box volumes 3% lower on a same-day basis, with Argentina significantly affecting the region's demand.
Potential Tariff Impacts
Uncertainty around tariffs between the US, Mexico, and Canada, which could affect product pricing and demand.
Energy Price Volatility
Recent spikes in energy prices in Europe could impact costs, although partially hedged.
Company Guidance
During the call, Smurfit Westrock provided guidance on several key metrics, reflecting a strong performance and future expectations. For the fourth quarter, the company reported an adjusted EBITDA of USD 1.166 billion and an adjusted EBITDA margin of 15.5%. For the full year 2024, they achieved a combined adjusted EBITDA of USD 4.706 billion, aligning with previous guidance. Looking ahead, the company expects to realize synergies exceeding USD 400 million by the end of the current year. Capital expenditures for 2025 are projected to be between USD 2.2 billion and USD 2.4 billion. The company also announced a dividend increase, with a quarterly dividend of USD 0.4308 per share. Lastly, for the first quarter of 2025, they anticipate delivering an adjusted EBITDA of approximately USD 1.25 billion, indicating a strong start to the year.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.