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Are Investors Undervaluing Graphic Packaging Holding Company (GPK) Right Now?

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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.

One company value investors might notice is Graphic Packaging Holding Company (GPK). GPK is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with P/E ratio of 8.41 right now. For comparison, its industry sports an average P/E of 12.58. Over the past 52 weeks, GPK's Forward P/E has been as high as 10.28 and as low as 8.29, with a median of 9.01.

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We also note that GPK holds a PEG ratio of 0.34. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. GPK's industry currently sports an average PEG of 0.41. GPK's PEG has been as high as 0.41 and as low as 0.33, with a median of 0.36, all within the past year.

Another valuation metric that we should highlight is GPK's P/B ratio of 3.41. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. GPK's current P/B looks attractive when compared to its industry's average P/B of 8. Over the past 12 months, GPK's P/B has been as high as 3.85 and as low as 3.04, with a median of 3.40.

Finally, our model also underscores that GPK has a P/CF ratio of 6.70. 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 20.64. Over the past 52 weeks, GPK's P/CF has been as high as 9.12 and as low as 6.20, with a median of 7.18.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Graphic Packaging Holding Company 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