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Barclays Downgrades WestRock to ‘Equal Weight’

Gabriel Kane

The Losers and Gainers, Upgrades and Downgrades of Consumer Stock

(Continued from Prior Part)

WestRock’s price movement 

WestRock (WRK) has a market cap of $10.8 billion. After Barclays downgraded the stock from “overweight” to “equal weight,” WRK fell 4.3% to close at $41.93 per share as of January 8, 2016. The price movements on weekly, monthly, and year-to-date (or YTD) bases are -8.1%, -12.7%, and -8.1%, respectively.

Technically, WestRock stock has broken the support and is trading below all moving day averages. It’s currently trading 7.2% below its 20-day moving average, 13.7% below its 50-day moving average, and 23.1% below its 200-day moving average.

The iShares Global Timber & Forestry ETF (WOOD) invests 3.1% of its holdings in WestRock. The ETF tracks the 25 largest publicly listed companies that own or manage forests and timberlands. The YTD price movement of WOOD is -6.4% as of January 7, 2016.

The competitors of WestRock (WRK) and their market caps are as follows:

  • International Paper (IP): $14.9 billion
  • Packaging Corporation of America (PKG): $5.7 billion
  • Graphic Packaging Holding (GPK): $4.0 billion

Barclays downgrades WestRock

Barclays downgraded its rating for WestRock from “overweight” to “equal weight” and set the price target at $50 per share from $70 per share.

Performance of WestRock in fiscal 4Q15 and fiscal 2015

WestRock (WRK) reported fiscal 4Q15 net sales of $3,872.6 million, a rise of 48.5% compared to net sales of $2,608.0 million in fiscal 4Q14. Its net income and EPS (earnings per share) fell to $115.8 million and $0.44, respectively, in fiscal 4Q15 compared to $153.9 million and $1.06, respectively, in fiscal 4Q14.

Fiscal 2015 results

In fiscal 2015, WRK reported net sales of $11,381.3 million, a rise of 15.0% YoY (year-over-year). Its net income and EPS rose to $507.1 million and $2.93, respectively, in fiscal 2015 compared to $479.7 million and $3.29, respectively, in fiscal 2014.

WestRock inventories rose by 90.8% in fiscal 2015. The company reported cash and cash equivalents of $228.3 million in fiscal 2015 compared to cash and cash equivalents of $32.6 million in fiscal 2014. Its debt-to-equity ratio fell to 1.2x in fiscal 2015 compared to debt-to-equity ratio of 1.6x in fiscal 2014.

The PE (price-to-earnings) and PBV (price-to-book value) ratios of WestRock are 13.2x and 0.94x, respectively, as of January 8, 2016.

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