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New Acquisitions Boost Graphic Packaging’s Stock

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Price movement of Graphic Packaging

Graphic Packaging Holding Company (GPK) has a market capitalization of $4.0 billion. It rose by 0.25% to close at $12.12 per share as of January 15, 2016. Its price movements on a weekly, monthly, and year-to-date (or YTD) basis are -0.08%, -5.5%, and -5.5%, respectively.

Technically, the stock has broken its support and is trading below all its moving averages. Currently, GPK is trading 3.4% below its 20-day moving average, 7.4% below its 50-day moving average, and 12.5% below its 200-day moving average.

The PowerShares DWA Momentum ETF (PDP) invests 1.1% of its holdings in Graphic Packaging. The ETF tracks an index of 100 US-listed large- and mid-cap companies selected and weighted by relative stock performance. The YTD price movement of PDP is -5.6% as of January 14, 2016.

The Vanguard Materials ETF (VAW) invests 0.65% of its holdings in Graphic Packaging. The ETF tracks a very broad market-cap–weighted index of US materials companies.

Competitors of Graphic Packaging and their market capitalizations are as follows:

  • International Paper Company (IP) — $15.1 billion
  • WestRock Company (WRK) — $9.5 billion
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Graphic Packaging’s acquisition

Graphic Packaging International, a subsidiary of Graphic Packaging Holding Company, has agreed to acquire 100% of the outstanding equity of Walter G. Anderson from shareholders. This includes the company’s two converting facilities. This acquisition is expected to close in the first quarter of 2016.

On January 11, 2016, Graphic Packaging International agreed to offer to purchase 100% of the outstanding shares of Colorpak.

Performance of Graphic Packaging in fiscal 3Q15

Graphic Packaging reported 3Q15 net sales of $1,070.0 million, a rise of 1.9% compared to $1,050.0 million in fiscal 3Q14. Its net income and EPS (earnings per share) rose to $60.2 million and $0.18, respectively, in fiscal 3Q15, compared to $53.0 million and $0.16, respectively, in fiscal 3Q14.

Meanwhile, its cash and cash equivalents fell by 0.12%, and its inventories rose by 9.1% in fiscal 3Q15 compared to fiscal 4Q14. Its debt-to-equity ratio fell to 1.8 in fiscal 3Q15 compared to 1.9 in fiscal 4Q14.

The PE (price-to-earnings) and PBV (price-to-book value) ratios of Graphic Packaging are 18.7x and 3.6x, respectively, as of January 15, 2016.

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