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GPK or AMCR: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors looking for stocks in the Containers - Paper and Packaging sector might want to consider either Graphic Packaging (GPK) or Bemis (AMCR). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Graphic Packaging has a Zacks Rank of #1 (Strong Buy), while Bemis has a Zacks Rank of #2 (Buy) right now. This means that GPK's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

GPK currently has a forward P/E ratio of 13.93, while AMCR has a forward P/E of 15.85. We also note that GPK has a PEG ratio of 0.56. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. AMCR currently has a PEG ratio of 2.83.

Another notable valuation metric for GPK is its P/B ratio of 2. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, AMCR has a P/B of 3.61.

These metrics, and several others, help GPK earn a Value grade of A, while AMCR has been given a Value grade of C.

GPK is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that GPK is likely the superior value option right now.


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Graphic Packaging Holding Company (GPK) : Free Stock Analysis Report
 
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