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Should Value Investors Buy Graphic Packaging (GPK) Stock?

Zacks Equity Research
·3 mins read

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

Graphic Packaging (GPK) is a stock many investors are watching right now. GPK is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 12.75, while its industry has an average P/E of 15.47. Over the past 52 weeks, GPK's Forward P/E has been as high as 19.06 and as low as 10.84, with a median of 14.30.

GPK is also sporting a PEG ratio of 0.51. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. GPK's industry has an average PEG of 1.25 right now. Within the past year, GPK's PEG has been as high as 1.23 and as low as 0.43, with a median of 0.57.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. GPK has a P/S ratio of 0.63. This compares to its industry's average P/S of 1.04.

Finally, investors should note that GPK has a P/CF ratio of 6.85. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. GPK's current P/CF looks attractive when compared to its industry's average P/CF of 20.13. Over the past year, GPK's P/CF has been as high as 7.59 and as low as 4.68, with a median of 6.84.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Graphic Packaging is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, GPK feels like a great value stock at the moment.

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Zacks Investment Research