Shareholders might have noticed that Graphic Packaging Holding Company (NYSE:GPK) filed its quarterly result this time last week. The early response was not positive, with shares down 3.9% to US$13.91 in the past week. It was a workmanlike result, with revenues of US$1.7b coming in 3.4% ahead of expectations, and statutory earnings per share of US$0.23, in line with analyst appraisals. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the twelve analysts covering Graphic Packaging Holding are now predicting revenues of US$6.62b in 2021. If met, this would reflect a credible 3.0% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to surge 148% to US$1.19. Before this earnings report, the analysts had been forecasting revenues of US$6.51b and earnings per share (EPS) of US$1.13 in 2021. So the consensus seems to have become somewhat more optimistic on Graphic Packaging Holding's earnings potential following these results.
There's been no major changes to the consensus price target of US$17.17, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Graphic Packaging Holding analyst has a price target of US$19.00 per share, while the most pessimistic values it at US$15.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Graphic Packaging Holding is an easy business to forecast or the the analysts are all using similar assumptions.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Graphic Packaging Holding's revenue growth will slow down substantially, with revenues next year expected to grow 3.0%, compared to a historical growth rate of 11% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 4.2% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Graphic Packaging Holding.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Graphic Packaging Holding's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Graphic Packaging Holding's revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Graphic Packaging Holding analysts - going out to 2022, and you can see them free on our platform here.
You still need to take note of risks, for example - Graphic Packaging Holding has 4 warning signs we think you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email firstname.lastname@example.org.