Graphic Packaging Holding Company (GPK) is a sustainable paper-based packaging firm. GPK shares have outpaced the market over the last two years and the past decade. Better yet, Graphic Packaging stock has withstood the brutal market fall in 2022 to hit new highs in May, following strong first quarter results.

Diverse Packaging Portfolio

Graphic Packaging is a sustainable paper and fiber-based packaging firm with a portfolio of products that services companies in areas such as food, beverage, and foodservice, as well as personal care, household products, and pets. If products, from cereal and frozen foods to tooth paste and dog treats, are sold in a paper-based package, there is a good chance Graphic Packaging has a sustainable packaging solution for it.

Graphic Packaging completed its acquisition of AR Packaging in November. The deal helped Atlanta, Georgia-based GPK broaden its geographical reach because AR is one of Europe’s leading packaging companies.

Graphic Packaging boasts that it is one of the biggest producers of folding cartons and paper-based foodservice products in the U.S. and now Europe. GPK also holds leading market positions in solid bleached sulfate paperboard, coated unbleached kraft paperboard, and coated-recycled paperboard.

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Recent Growth and What’s Next

Graphic Packaging works with countless recognizable brands for its folding cartons, cooking solutions, foodservice containers, cups, and more. GPK has grown its revenue at a rather solid clip over the years, with a few hiccups along the way. Graphic Packaging’s revenue climbed 7% in 2020 and 9% last year.

Most recently, Graphic Packaging topped our Q1 earnings and revenue estimates in late April. Its sales climbed 36%, driven mostly by its acquisition, with organic revenue up 3%. And its adjusted quarterly earnings surged 71% YoY to top our estimate by 26%.

Graphic Packaging’s FY22 and FY23 consensus earnings estimates have climbed 8% and 11%, respectively since its recent release. GPK is continuing to work through the broader supply chain challenges that are impacting the entire economy. Thankfully, it’s been able to adjust its prices to offset what it called an “unprecedented inflationary environment.”

Zacks estimates call for Graphic Packaging’s revenue to jump 25% this year to $8.95 billion and then pop 2% higher in 2023, as the YoY comparisons normalize. GPK’s adjusted FY22 earnings are projected to soar 87% to $2.13 a share, with FY23’s figure set to climb another 10.4%.

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Price & Valuation

As we mentioned up top, Graphic Packaging shares have outclimbed the S&P 500 over the last 10 years, up 375% vs. 322%. This run includes a 75% jump over the last two years vs. the benchmark’s 50%. GPK shares have also popped over 10% in 2022, which looks fantastic compared to its industry’s 3% drop and the market’s 13% decline.  

GPK hit a new record high of roughly $22.71 per share on Thursday, May 6. The stock’s ability to drive straight through the current market storm while the Nasdaq falls deeper into a bear market should intrigue investors. The stock did pull back from those levels to hover around $21.76 a share at the close on Friday.

Graphic Packaging’s under $25 a share price tag might attract investors looking for great low-price stocks. On top of its cheap stock price, GPK is trading right near decade-long lows at 10.0X forward 12-month earnings. 

GPK's current forward earnings multiple represents a 50% discount to its own highs during the past ten years and 33% value vs. its own median. Graphic Packaging is also trading at a 29% discount to its industry right now. Its valuation is quite impressive given that GPK stock has soared 374% in the last 10 years and just hit new highs.

Bottom Line

Wall Street has clearly gravitated to GPK for its stability over an extended period of time. Graphic Packaging’s recent climb also comes as investors search for stable companies with great value, as people dump growth-focused tech stocks amid rising interest rates.

Graphic Packaging’s earnings revisions activity helps it land a Zacks Rank #1 (Strong Buy) right now. And eight of the dozen brokerage recommendations Zacks has are “Strong Buys.” Graphic Packaging also pays a dividend that’s yielding 1.4% at the moment, which is good enough to match the S&P 500.