Is Graphic Packaging Holding Company (GPK) Stock Undervalued 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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system’s “Value” category. Stocks with both “A” grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One stock to keep an eye on is Graphic Packaging Holding Company (GPK). GPK is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 9.62, which compares to its industry’s average of 11.42. Over the past year, GPK’s Forward P/E has been as high as 17.63 and as low as 8.29, with a median of 9.87.

Another valuation metric that we should highlight is GPK’s P/B ratio of 3.76. 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. This stock’s P/B looks attractive against its industry’s average P/B of 8.25. Over the past year, GPK’s P/B has been as high as 3.85 and as low as 2.95, with a median of 3.33.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock’s price with the company’s 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 0.8. This compares to its industry’s average P/S of 0.93.

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Finally, our model also underscores that GPK has a P/CF ratio of 8.66. 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 22.33. GPK’s P/CF has been as high as 9.25 and as low as 7.37, with a median of 8.43, all within the past year.

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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