Zacks Industry Outlook Highlights Graphic Packaging, Greif, AptarGroup and Brambles Limited
For Immediate Release
Chicago, IL – May 25, 2023 – Today, Zacks Equity Research discusses Graphic Packaging Holding Company GPK, Greif, Inc. GEF, AptarGroup, Inc. ATR and Brambles Limited BXBLY.
Industry: Paper Packaging
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The paper packaging industry has grown in importance as concerns about the environmental impact of packaging materials has grown. This is a secular driver for the industry, as governments all over the world double down in their efforts to save the planet. The fact that paper packaging comes from a renewable resource (i.e. trees, the production of which can be managed sustainably), is recyclable, easily biodegradable and also extremely versatile makes it a compelling alternative to traditional plastic packaging.
Because of its versatility, paper packaging can be adapted for different industries:
Corrugated packaging, also known as cardboard, is commonly used in shipping, transportation, and e-commerce. Its strength and structural integrity provide excellent protection for products during transit. Corrugated packaging is highly customizable, allowing businesses to create tailored solutions that meet their specific packaging needs.
Paperboard packaging, on the other hand, is versatile and widely used for retail packaging. It is commonly seen in the cosmetics, food, electronics and various other consumer goods industries. The smooth surface of paperboard packaging allows for creative branding, design and product information display, capturing consumer attention and enhancing brand visibility.
Paper bags and sacks offer a sustainable alternative to single-use plastic bags. Widely used in retail, grocery, and food service sectors, paper bags are sturdy and capable of carrying moderately heavy loads. Many paper bags are made from recycled materials, further reducing the environmental impact and providing businesses and consumers with an eco-friendly option.
Innovations continue to expand the use of paper in packaging:
Advanced printing and labeling techniques have brought high-quality graphics, vibrant colors and intricate designs, enhancing brand visibility and product appeal while barcode and QR code integration facilitate efficient supply chain management, inventory tracking and consumer engagement.
To enhance the durability and moisture resistance of paper packaging, various coatings and barriers have been developed. These coatings protect the integrity of the packaging, ensuring the product remains fresh and secure. Bio-based and compostable coatings are being developed as alternatives to traditional petroleum-based options.
Despite all these advantages, the need to innovate the product and processes remains because the cost of production needs to match sustainability goals. Additionally, government regulations regarding waste management also potentially increases cost.
Here are a couple of stocks that can increase your exposure to this attractive market:
Graphic Packaging Holding Company
Graphic Packaging Holding Company is a leading provider of fiber-based packaging solutions for food, beverage, foodservice and consumer products companies. With a focus on paperboard packaging, the company offers a wide range of products including folding cartons, cups, lids and food containers. It also provides specialized packaging machines and installation services. With a global presence and three segments - Paperboard Mills, Americas Paperboard Packaging and Europe Paperboard Packaging - Graphic Packaging serves customers worldwide from its headquarters in Atlanta, Georgia.
Estimates for this Zacks Rank #1 (Strong Buy) stock have increased substantially in the last 30 days. The 2023 estimate increased 28 cents (10.2%) while the 2024 estimate increased 23 cents (8.1%). Analysts currently expect the company to generate revenue and earnings growth of 6.0% and 30.0% this year, followed by 2.5% revenue growth and 1.9% earnings growth next year.
GPK shares trade at 8.34X P/E, which is a 33.9% discount to the industry and a 55.4% discount to the S&P 500. They’re also trading at a 7.3% discount to their median level over the past year. Therefore, the shares may be considered a screaming buy.
Greif, Inc.
Delaware, Ohio-based Greif is a global leader in the production and sale of industrial packaging products and services. With three segments - Global Industrial Packaging, Paper Packaging & Services, and Land Management - the company offers a diverse range of packaging solutions, including drums, intermediate bulk containers, closure systems, and corrugated sheets. Greif serves a wide range of industries, such as chemicals, food and beverage, pharmaceuticals, and automotive. Additionally, the company is involved in timberland management and the sale of timber properties.
Zacks #2 (Buy) ranked Greif is currently expected to see revenue and earnings decline in the year ended October 2023. Its 2023 estimate has only increased 5 cents, or close to a percentage point in the last 60 days. However, 2024 is expected to see a turnaround with revenue increasing 1.6% and earnings increasing 7.9%. estimates for the year are up 3 cents in the last 60 days.
GEF shares are trading at 11.74X P/E. Although a 38% discount to the S&P 500 and 7% discount to the industry, they are trading above their own median level over the past year.
A couple other packaging stocks also looking good are:
AptarGroup, Inc.
AptarGroup is a global leader in providing innovative solutions for drug delivery, consumer product dispensing, and active material science. The company serves various industries, including pharmaceutical, beauty, personal care, home care, and food and beverage. With three segments - Aptar Pharma, Aptar Beauty, and Aptar Closures - AptarGroup offers a wide range of products such as pumps, valves, closures, and aerosol solutions. Headquartered in Crystal Lake, Illinois, the company operates worldwide, serving customers through its sales force, representatives, and distributors.
Analysts currently expect the Zacks #2 ranked AptarGroup to grow its revenue and earnings a respective 4.9% and 9.5% this year. In 2024, they expect increases of 4.7% and 10.0%, respectively. In the last 30 days, the Zacks Consensus Estimate for 2023 increased 29 cents (7.5%) and for 2024, it increased 20 cents (4.6%).
ATR shares are trading at a premium to both the S&P 500 and the industry, although they’re at a slight discount to their own median value over the past year.
Brambles Limited
Sydney, Australia-based Brambles Limited operates as a supply-chain logistics company. It operates through CHEP North America and Latin America; CHEP Europe, Middle East, Africa and India; and CHEP Australia, New Zealand and Asia, excluding India segments. The company engages in the pooling of unit-load equipment and associated services, focusing on the outsourced management of pallets, crates, and containers. It serves customers in the fast-moving consumer goods, fresh produce, beverage, retail and general manufacturing industries.
Brambles’ estimates have not moved up much in the last 60 days. But current estimates for the Zacks Rank #2 stock’s revenue and earnings already represent 16.3% and 9.6% growth, respectively this year followed by further growth of a respective 7.0% and 13.2% next year.
BXBLY shares are trading at a slight discount to their median value over the past year, although at a premium to the industry and also the S&P 500.
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