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RBC Capital Rated Graphic Packaging Holding an ‘Outperform’

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Price movement

Graphic Packaging Holding (GPK) has a market cap of $4.5 billion. It rose 2.8% to close at $13.99 per share on September 30, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -1.1%, -2.1%, and 10.3%, respectively, on the same day.

GPK is trading 0.58% below its 20-day moving average, 0.42% above its 50-day moving average, and 8.5% above its 200-day moving average.

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Related ETF and peers

The Vanguard Small-Cap Value ETF (VBR) invests 0.26% of its holdings in GPK. The ETF aims to tracks the CRSP US Small-Cap Value Index. The index selects from a list of stocks in the 85%–99% range of market cap, based on five value factors. The YTD price movement of VBR was 13.5% on September 30, 2016.

The market caps of GPK’s competitors are as follows:

  • International Paper (IP): $19.7 billion
  • WestRock (WRK): $12.2 billion

GPK’s rating

RBC Capital has initiated coverage of Graphic Packaging Holding with an “outperform” rating and set the stock’s price target at $17 per share.

Performance of Graphic Packaging in 2Q16

Graphic Packaging reported 2Q16 net sales of $1.1 billion, a rise of 4.4% compared to $1.2 billion in 2Q15. The company’s cost of sales as a percentage of net sales rose 0.20%, and its income from operations fell 4.2% in 2Q16 compared to the prior year’s period. It reported business combinations and other special charges of $5.3 million in 2Q16 compared to $3.9 million in 2Q15.

Its net income and EPS (earnings per share) rose to $77.8 million and $0.24, respectively, in 2Q16, compared to $57.6 million and $0.17, respectively, in 2Q15. It reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $195.2 million in 2Q16, a rise of 1.6% compared to 2Q15.

GPK’s cash and cash equivalents fell 29.5%, and its inventories rose 5.9% in 2Q16 compared to 4Q15. Its current ratio and long-term debt-to-equity ratio rose to 1.6x and 2.0x, respectively, in 2Q16 compared to 1.5x and 1.7x, respectively, in 4Q15.

The company repurchased shares worth of $37.0 million in 2Q16.

Next, let’s take a look at PVH Corporation (PVH).

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