Q3 Earnings Preview for Graphic Packaging (NYSE:GPK)

in EARNINGS/INVESTING IDEAS by

Graphic Packaging Holding Company (NYSE:GPK) is scheduled to report Q3 earnings results before markets open for trading on October 20, 2020.

The company is expected to report earnings of $0.22/share on revenue of $1.643 billion. The consensus earnings per share (EPS) of $0.22/share is based on a poll of 13 analysts and represents a growth in eps of 11.9% over the same quarter last year, when the company reported earnings of $0.20/share.

The revenue forecast of $1.643 billion based on a poll of 10 analysts implies a year-over-year (YoY) growth in revenue of 3.9%. Last year the company reported $1.582 billion in revenue for the quarter.

Expected to report EPS growth of 11.9% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $1,642.53 $1,581.60 3.9%
EPS $0.22 $0.20 11.9%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and missed expectations 2 quarters.

What are your expectations from Graphic Packaging Holding Company for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.19 $0.26 40.1% Beat
Q1, 2020 $0.25 $0.31 25.6% Beat
Q4, 2019 $0.23 $0.23 −1.1% Missed
Q3, 2019 $0.19 $0.20 3.9% Beat
Q2, 2019 $0.21 $0.24 12.6% Beat
Q1, 2019 $0.18 $0.21 14.7% Beat
Q4, 2018 $0.19 $0.23 22.0% Beat
Q3, 2018 $0.24 $0.22 −8.8% Missed

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price did not react much to the update.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 21, 2020 $14.20 $14.32 0.8% Increase
April 21, 2020 $13.17 $12.97 −1.5% Decline
January 28, 2020 $16.42 $16.08 −2.1% Decline
October 22, 2019 $14.88 $15.64 5.1% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.91, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.91 implies a 0.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

Graphic Packaging Holding Company is currently trading at $14.53/share, up 0.4% for the day. The company is trading at approximately 85.8% of its 52-week high of $16.95/share. The company’s stock price is up 1.4% since the last earnings report and up 0.1% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 51.84 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:GPK Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 32.42 and a forward P/E multiple of 13.60.

Graphic Packaging Holding Company’s current share price also implies a price-to-book (P/B) multiple of 2.65. The following table summarizes some other key fundamental ratios:

Data as of October 19, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $14.53
P/E Ratio 32.4x
P/E Ratio (Fwd) 13.6x
PEG Ratio −0.6
Total Debt / Total Capital 43.1%
Levered Free Cash Flow $248.6 million
EV / EBITDA 9.4x

Finbox

Graphic Packaging Holding Company is a mid-cap stock with a market capitalization of $4.035 billion and a total enterprise value of $8.023 billion. The company operates in the Materials sector and the Containers & Packaging industry.

Graphic Packaging Holding Company, together with its subsidiaries, provides paper-based packaging solutions to food, beverage, foodservice, and other consumer products companies. It operates through three segments: Paperboard Mills, Americas Paperboard Packaging, and Europe Paperboard Packaging. The company offers coated unbleached kraft (CUK), coated recycled paperboard (CRB), and solid bleached sulfate paperboard (SBS) to various paperboard packaging converters and brokers; and paperboard packaging products, such as folding cartons, cups, lids, and food containers primarily to consumer packaged goods, quick-service restaurants, and foodservice companies. It also manufactures corrugated medium products; offers various laminated, coated, and printed packaging structures that are produced from its CUK, CRB, and SBS, as well as other grades of paperboards that are purchased from third-party suppliers; designs and manufactures specialized packaging machines that package bottles and cans, and non-beverage consumer products; and installs its packaging machines at customer plants and provides support, service, and performance monitoring of the machines. The company markets its products primarily through sales offices and broker arrangements with third parties in the Americas, Europe, and the Asia Pacific. Graphic Packaging Holding Company is headquartered in Atlanta, Georgia.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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