graphic packaging (G.P.K. – Free Report) is one of the most searched stocks on Zacks.com these days. So it's worth looking at some facts that could shape the stock's performance in the short term.
The packaging company's stock has increased by +1.7% over the past month. In comparison, the Zacks S&P 500 Composite Index, +4.7%, has negligible gains. The Zacks Containers-Paper and Packaging industry, which Graphic Packaging belongs to, has gained 1.4% in this period. The key question here is where the stock is likely to go in the short term.
While media reports and rumors about significant changes in a company's business outlook typically trigger stock price trends and lead to immediate price movements, there are always certain fundamental factors that ultimately drive the buy-and-hold decision. Exists.
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.
Our analysis is fundamentally based on how the sell-side analysts covering a given stock are revising their earnings estimates to account for the latest business trends. As a company's earnings expectations rise, so does the fair value of its stock. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, which causes the stock price to rise. For this reason, empirical research has shown that there is a strong correlation between trends in earnings forecast revisions and short-term stock price movements.
Graphic Packaging, Inc. is expected to report earnings of $0.64 per share for the current quarter, which would represent a change of -16.9% from the year-ago period. Over the past 30 days, the Zacks Consensus Estimate has changed by -5.8%.
The consensus earnings estimate for the current fiscal year of $2.75 represents a -5.5% change from the prior year. This estimate has changed -1.6% over the past 30 days.
Next year's consensus earnings estimate of $2.97 represents a +8.2% change from what Graphic Packaging was expected to report a year ago. Over the past month, the forecast has changed by -1.7%.
The Zacks Rank, a proprietary stock evaluation tool with a strong, outside-audited track record, effectively harnesses the power of earnings estimate revisions to deliver a more definitive picture about near-term stock price direction. We provide The magnitude of recent consensus estimate changes, as well as three other factors related to earnings estimates, give Graphic Packaging a Zacks Rank #3 (Hold).
The chart below shows the company's consensus EPS estimate over the next 12 months over time.
12 months EPS
Expected revenue growth rate
There's no question that a company's profit growth is the best indicator of its financial health, but nothing will happen if it doesn't make a profit. 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.
For Graphic Packaging, the consensus revenue estimate for the current quarter is $2.47 billion, representing a year-over-year change of +1.5%. Forecasts of $9.89 billion and $10.27 billion for the current and next fiscal year represent changes of +4.9% and +3.8%, 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.
The present 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), and the past value of your company Comparing a company to its peers based on these parameters can help you see if it is overvalued, overvalued or undervalued, but how reasonable its stock is You can get a good idea of what
The Zacks Value Style Score (part of the Zacks Style Scores system) pays close attention to both traditional and non-traditional valuation metrics and rates stocks from A to F, where A is better than B. , B is better than C, A is better than B, and B is better than C). ), can be very helpful in identifying whether a stock is overvalued, properly 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 much of the other information 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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