graphic packaging (G.P.K. – (Free Report) recently appeared on the list of most searched stocks on Zacks.com. Therefore, you may need to consider some important factors that may influence the stock's performance in the near future.
Over the past month, the packaging company's stock has increased by +14.5%. This compares to a +3.3% change in the Zacks S&P 500 Composite Index. During this period, the Zacks Container Paper & Packaging industry, which includes Graphic Packaging, rose 5.7%. The key question here is: What is the future direction of the stock price?
While media releases and rumors about significant changes in a company's business prospects typically cause its stock to “trend” and lead to immediate price movements, there are some fundamentals that ultimately govern buy-and-hold decisions. There are always facts.
Regarding revisions to performance forecasts
At Zacks, we prioritize evaluating changes in company earnings estimates rather than focusing on anything else. This is because we believe that the fair value of a stock is determined by the present value of its future income stream.
Essentially, we look at how the sell-side analysts covering a stock are revising their earnings estimates to reflect the impact of the latest business trends. And as a company's earnings expectations rise, so does the fair value of its stock. If the fair value is higher than the current market price, investors will be more willing to buy the stock, causing the price to rise. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
For the current quarter, Graphic Packaging is expected to post earnings of $0.63 per share, down 18.2% from the year-ago period. The Zacks Consensus Estimate remained unchanged over the past 30 days.
The consensus earnings estimate for the current fiscal year of $2.71 represents a -6.9% change from the prior year. This estimate has not changed over the past 30 days.
Next year's consensus earnings estimate of $2.92 represents a +8% change from the earnings that Graphic Packaging was expected to report a year ago. Estimates have not changed over the past month.
The Zacks Rank, a proprietary stock evaluation tool with an impressive, outside-audited track record of impressive results, harnesses the power of earnings estimate revisions to be a more conclusive indicator of a stock's short-term price performance. . The magnitude of the recent consensus estimate change, along with three other factors related to earnings estimates, has led to a Zacks Rank #3 (Hold) for the Graphic Packaging sector.
The chart below shows the company's consensus EPS estimate over the next 12 months over time.
12 months EPS
Revenue growth forecast
There's no question that a company's revenue growth is the best indicator of its financial health, but if it's not profitable, nothing will happen. It's nearly impossible for a company to expand its bottom line without growing it over the long term. Therefore, it's important to know a company's earnings growth potential.
Graphic Packaging's consensus revenue estimate for the current quarter is $2.39 Billion, representing a year-over-year change of -1.8%. Estimates for the current and next fiscal year are $9.65 billion and $10 billion, representing changes of +2.4% and +3.6%, respectively.
Last reported results and surprising details
Graphic Packaging, Inc. reported revenue of $2.25 billion in its last reported quarter. This represents a -5.7% year-over-year change. EPS for the same period was $0.75, compared to $0.59 a year ago.
The reported revenue represents a surprise of -7.23% when compared to the Zacks Consensus Estimate of $2.42 billion. EPS surprise was +8.7%.
Over the last four quarters, Graphic Packaging has surpassed consensus EPS estimates three times. He's the only time the company has exceeded consensus revenue estimates during this period.
evaluation
You cannot make efficient investment decisions without considering stock valuation. To predict a stock's future price performance, it is important to determine whether the current price accurately reflects the intrinsic value of the underlying business and the company's growth prospects.
Compare the current value of a company's valuation multiples, such as price to earnings (P/E), price to sales (P/S), and price to cash flow (P/CF), to its own value, while also Value helps determine whether a stock is fairly valued, overvalued, or undervalued, and by comparing a company to its peers based on these parameters, you can determine whether a stock is reasonably priced. I can understand the gender.
Zacks Value Style Score (part of the Zacks Style Scores system). We pay close attention to both traditional and non-traditional metrics and rate stocks from A to F (A is better than B, B is better than C, and A is better than B. is also very useful in identifying whether a stock is overvalued, well-valued, or temporarily undervalued.
Graphic Packaging is rated A on this score, indicating it trades at a discount to its peers. Click here to see the values ​​of some of the metrics that determined this grade.
conclusion
The facts discussed here and many others on Zacks.com may help you decide whether the market buzz regarding graphic packaging is worth paying attention to. However, the company's Zacks Rank #3 suggests it could outperform the broader market in the near term.
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