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Should Value Investors Buy Graphic Packaging (GPK) Stock?

Zacks Equity Research
·3 mins read

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is Graphic Packaging (GPK). GPK is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 12.89, which compares to its industry's average of 15.51. GPK's Forward P/E has been as high as 19.06 and as low as 10.84, with a median of 14.64, all within the past year.

Investors will also notice that GPK has a PEG ratio of 0.52. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. GPK's industry has an average PEG of 1.25 right now. Over the last 12 months, GPK's PEG has been as high as 1.23 and as low as 0.43, with a median of 0.61.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. GPK has a P/S ratio of 0.64. This compares to its industry's average P/S of 1.03.

Finally, investors should note that GPK has a P/CF ratio of 6.90. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid 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 6.80.

These are just a handful of the figures considered in Graphic Packaging's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that GPK is an impressive value stock right now.


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