Jefferies Downgrades Graphic Packaging Holding to ‘Hold’

Graphic Packaging Holding Company (GPK) has a market cap of $3.9 billion. It fell 2.3% to close at $12.26 per share on January 20, 2017. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -5.3%, -3.4%, and -1.8%, respectively, on the same day.

GPK is trading 3.6% below its 20-day moving average, 3.7% below its 50-day moving average, and 6.6% below its 200-day moving average.

The Vanguard Small-Cap Value ETF (VBR) invests 0.26% of its holdings in GPK. The YTD price movement of VBR was 0.31% on January 20.

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

• International Paper Company (IP) — $22.1 billion
• WestRock Company (WRK) — $13.0 billion

On January 20, 2017, Jeffries downgraded Graphic Packaging Holding Company’s rating to “hold” from “buy.” It also reduced the stock’s price target to $14.00 from $15.00 per share.

According to analyst Philip Ng, “With demand remaining weak and rising input costs, we are cutting our 2017 estimates (4% below consensus) and expect muted EPS growth and anticipate pushback on the CRB price increase.”

Graphic Packaging Holding (GPK) reported 3Q16 net sales of $1.1 billion, a rise of 3.1% compared to $1.2 billion in 3Q15. The company’s income from operations as a percentage of net sales narrowed 80 basis points in 3Q16 compared to 3Q15.

Its net income fell to $57.8 million in 3Q16 compared to $60.2 million in 3Q15. It reported EPS (earnings per share) of $0.18 for 3Q16 and 3Q15. It reported adjusted EBITDA[1. earnings before interest, tax, depreciation, and amortization] of $200.1 million in 3Q16, a rise of 1.5% compared to 3Q15.

GPK’s cash and cash equivalents fell 16.8%, and its inventories rose 6.2% between 3Q16 and 4Q15.

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