Graphic Packaging (GPK) AI Stock Analysis

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Graphic Packaging

(NYSE:GPK)

64Neutral

Graphic Packaging's strengths include strong profitability margins and strategic initiatives supporting long-term growth. However, challenges such as declining revenue, high leverage, and immediate market pressures from inflation and consumer environment weigh on performance. The stock's undervaluation provides a potential opportunity despite short-term technical weaknesses.

Positive Factors

Free Cash Flow

Graphic Packaging appears more likely to initiate buybacks now given the improved free cash flow.

Innovation

GPK is well-positioned to play its paperboard packaging game at a higher level than most of its peers, supported by its low-cost mill position and ability to drive innovation.

Sustainability

Sustainability trends continue to be a catalyst for GPK, given factors like paperboards’ high recycling rate.

Negative Factors

Earnings Guidance

A negative share price reaction is expected due to EBITDA hitting the lower end of the guidance range and falling short of consensus.

Financial Outlook

Inflation is an additional impact to guidance, affecting the company's financial outlook.

Guidance

Much of Graphic Packaging's guidance reduction is driven by operating de-leverage as it moves from a positive to a negative volume outlook.

Graphic Packaging (GPK) vs. S&P 500 (SPY)

Market Cap

$6.97B

Dividend Yield1.77%

Average Volume (3M)3.51M

Price to Earnings (P/E)11.3

Beta (1Y)0.49

Revenue Growth-6.28%

EPS Growth-7.43%

CountryUS

Employees23,000

SectorConsumer Cyclical

Sector Strength77

IndustryPackaging & Containers

Share Statistics

EPS (TTM)0.51

Shares Outstanding301,760,200

10 Day Avg. Volume5,049,467

30 Day Avg. Volume3,510,407

Financial Highlights & Ratios

PEG Ratio-1.95

Price to Book (P/B)2.11

Price to Sales (P/S)0.00

P/FCF Ratio-12.76

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$26.71

Price Target Upside14.54% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering7

Graphic Packaging Business Overview & Revenue Model

Company DescriptionGraphic Packaging Holding Company (GPK) is a leading provider of paper-based packaging solutions for a wide variety of products to food, beverage, foodservice, and other consumer products companies. The company operates primarily in the paperboard packaging sector, offering an extensive range of packaging products including folding cartons, beverage carriers, and foodservice containers. Graphic Packaging is committed to sustainability, leveraging renewable resources to create innovative and environmentally friendly packaging solutions.

How the Company Makes MoneyGraphic Packaging makes money through the manufacturing and sale of its paperboard packaging products to a diverse range of industries, primarily focusing on food and beverage companies. The company generates revenue by entering into long-term contracts with major consumer brands that require sustainable packaging solutions. These partnerships are crucial, as they ensure a steady demand for Graphic Packaging's products. Additionally, the company benefits from its vertically integrated supply chain, which allows it to control costs and maintain competitive pricing. By focusing on sustainability, Graphic Packaging also taps into the growing demand for eco-friendly packaging options, further driving its revenue growth.

Graphic Packaging Financial Statement Overview

Summary

Graphic Packaging exhibits strong profitability margins and return on equity. However, challenges include declining revenue, high leverage, and negative free cash flow. The balance sheet shows substantial debt, which could pose risks if not managed effectively.

Income Statement

Positive

Graphic Packaging shows a mixed performance in its income statement. The gross profit margin for TTM is approximately 41.0%, indicating a strong ability to manage production costs. However, the net profit margin for TTM stands at around 7.2%, showing room for improvement in overall profitability. Revenue has been declining, with a TTM revenue of $8.67B compared to $9.43B the previous year, reflecting a negative revenue growth rate. Despite the decline in revenue, the EBIT margin remains robust at 12.2% for TTM, suggesting effective cost management beyond COGS.

Balance Sheet

Positive

The balance sheet of Graphic Packaging displays moderate financial stability. The debt-to-equity ratio is high at approximately 1.81, indicating significant leverage which could be a risk factor. Return on equity (ROE) for TTM is around 19.6%, showing a strong return to shareholders. The equity ratio is about 27.5%, highlighting a moderate level of asset financing through equity which can be improved to enhance financial stability.

Cash Flow

Neutral

Cash flow analysis reveals challenges in maintaining positive free cash flow, with TTM free cash flow at -$209M. The operating cash flow to net income ratio is approximately 1.07, indicating that operational cash generation is adequate relative to net income. However, the negative free cash flow growth rate suggests difficulties in converting operational success into free cash flow, likely due to high capital expenditures.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
8.67B	8.81B	9.43B	9.44B	7.16B	6.56B
	Gross Profit
1.88B	1.96B	2.19B	1.83B	1.07B	1.10B
	EBIT
1.06B	1.12B	1.33B	906.00M	550.00M	524.30M
	EBITDA
1.60B	1.67B	1.95B	1.60B	1.04B	909.90M
	Net Income Common Stockholders
620.00M	658.00M	723.00M	522.00M	204.00M	167.30M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
129.00M	157.00M	162.00M	150.00M	172.00M	179.00M
	Total Assets
11.50B	11.14B	11.18B	10.33B	10.46B	7.80B
	Total Debt
5.71B	5.25B	5.62B	5.25B	5.79B	3.64B
	Net Debt
5.58B	5.09B	5.46B	5.10B	5.62B	3.47B
	Total Liabilities
8.34B	8.13B	8.39B	8.18B	8.56B	5.96B
	Stockholders Equity
3.16B	3.01B	2.78B	2.15B	1.89B	1.42B
Cash Flow		Free Cash Flow
-522.00M	-363.00M	340.00M	541.00M	-193.00M	199.30M
	Operating Cash Flow
663.00M	840.00M	1.14B	1.09B	609.00M	845.60M
	Investing Cash Flow
-329.00M	-342.00M	-1.02B	-435.00M	-2.39B	-668.70M
	Financing Cash Flow
-337.00M	-489.00M	-106.00M	-666.00M	1.78B	-152.00M

Graphic Packaging Technical Analysis

Technical Analysis Sentiment

Negative

Last Price23.32

Price Trends

50DMA

24.88

Negative

100DMA

25.90

Negative

200DMA

27.39

Negative

Market Momentum

MACD

-0.62

Negative

RSI

46.03

Neutral

STOCH

89.91

Negative

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 23.32 is below the 20-day moving average (MA) of 23.64, below the 50-day MA of 24.88, and below the 200-day MA of 27.39, indicating a bearish trend. The MACD of -0.62 indicates Negative momentum. The RSI at 46.03 is Neutral, neither overbought nor oversold. The STOCH value of 89.91 is Negative, 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 (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CCK	73 Outperform	$11.61B	21.43	21.30%	1.01%	0.90%	34.40%
SLGN	73 Outperform	$5.82B	20.15	14.52%	1.40%	1.99%	-5.30%
SEE	71 Outperform	$4.77B	15.67	43.40%	2.46%	-2.45%	-16.55%
SON	71 Outperform	$4.45B	29.34	5.54%	4.54%	-4.58%	-61.14%
GPK	64 Neutral	$6.97B	11.33	20.62%	1.77%	-6.28%	-7.43%
Sector *	61 Neutral	$6.98B	11.29	2.93%	3.90%	2.60%	-21.72%

* Consumer Cyclical Sector Average

Performance Comparison

GPK

Graphic Packaging

23.55

-4.17

-15.04%

CCK

Crown Holdings

99.45

15.75

18.82%

SEE

Sealed Air

32.30

-5.67

-14.93%

SLGN

Silgan Holdings

55.45

8.93

19.20%

SON

Sonoco Products

46.38

-11.32

-19.62%

Graphic Packaging Earnings Call Summary

Earnings Call Date:May 01, 2025

(Q1-2025)

% Change Since: -7.86%|

Next Earnings Date:Jul 29, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted significant strategic initiatives such as the Waco investment and share repurchase plan, reflecting confidence in long-term growth. However, it also revealed immediate challenges including significant input cost inflation, weaker volumes, and a challenging consumer environment, resulting in flat revenue and declining margins.

Q1-2025 Updates

Positive Updates

Waco Recycled Paperboard Investment on Track

The Waco recycled paperboard investment is on track for startup with hiring effectively complete and training well underway. The facility is expected to generate substantial excess cash over the next several years.

New $1.5 Billion Share Repurchase Authorization

The board approved a new $1.5 billion share repurchase authorization, reflecting confidence in the company's Vision 2030 priorities and business model.

Innovation Sales Growth

Innovation sales growth came in at $44 million for the quarter, with a target of at least 2% growth in 2025.

Sustainable Consumer Packaging Leadership

Graphic Packaging remains a global leader in sustainable consumer packaging with a broad consumer staples packaging portfolio.

Negative Updates

Significant Input Cost Inflation

The company experienced significant input cost inflation across energy, chemicals, logistics, and transportation, leading to a $21 million impact.

Weaker than Expected Volumes

Volumes were below expectations, with the Americas business down about 1%, driven by a stretched consumer and declining consumer confidence.

Flat Revenue and Declining Margins

First quarter sales were $2.1 billion, flat year-over-year, with adjusted EBITDA of $365 million and margins at 17.2%, significantly below expectations.

Closure of Middletown Facility

The Middletown, Ohio recycled paperboard facility, built in 1909, will close on June 1st, marking a significant shift in operations.

Challenging Consumer Environment

High food prices and economic uncertainty led to stretched consumers pulling back, impacting volumes and sales across key markets.

Company Guidance

In the Graphic Packaging First Quarter 2025 earnings call, the company provided guidance reflecting the challenges faced due to weak consumer volumes and significant input cost inflation. Despite these hurdles, the company remained focused on innovation and execution, expecting to generate substantial cash flow in the coming years. For the first quarter, Graphic Packaging reported sales of $2.1 billion, an adjusted EBITDA of $365 million, and margins of 17.2%, with adjusted EPS at $0.51. The company adjusted its guidance to reflect a higher level of uncertainty, projecting a 2% volume decline and broad-based inflation of $80 million. A $40 price increase on recycled and unbleached paperboard grades was announced to help offset costs, with the expectation of margin improvements later in the year. The board also approved a new $1.5 billion share repurchase authorization, reflecting confidence in the company's future cash flow and commitment to returning capital to stockholders.

Graphic Packaging Corporate Events

Executive/Board Changes

Graphic Packaging Announces Leadership Change with Yost’s Return

Neutral

May 5, 2025

On May 1, 2025, Maggie Bidlingmaier resigned from her role as Executive Vice President and President, Americas at Graphic Packaging Holding Company, with her employment concluding on June 2, 2025. Joseph P. Yost, who has extensive experience within the company, assumed her position on the same day, marking a return to a role he previously held. Yost’s new appointment comes with a salary increase and enhanced incentive targets, reflecting the expanded responsibilities of his position.

Spark’s Take on GPK Stock

According to Spark, TipRanks’ AI Analyst, GPK is a Neutral.

Graphic Packaging’s strengths include strong profitability margins and strategic initiatives supporting long-term growth. However, challenges such as declining revenue, high leverage, and immediate market pressures from inflation and consumer environment weigh on performance. The stock’s undervaluation provides a potential opportunity despite short-term technical weaknesses.

To see Spark’s full report on GPK stock, click here.

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.