At US $ 20.34, is Graphic Packaging Holding Company (NYSE: GPK) worth a close look?

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Graphic Packaging Holding Company (NYSE: GPK), may not be a large cap stock, but it has seen decent teen-level share price growth on the NYSE over the past few months. With many analysts covering midcap stocks, we can expect any price sensitive announcement to have factored into the share price already. But what if there is still an opportunity to buy? Today, I’m going to analyze the most recent data on the outlook and assessment of Graphic Packaging Holding to see if the opportunity still exists.

What is the opportunity for Graphic Packaging Holding?

Graphic Packaging Holding is currently expensive based on my multiple pricing model, where I look at the company’s price / earnings ratio relative to the industry average. I used the price / earnings ratio in this case because there is not enough visibility to forecast its cash flow. The stock’s ratio of 27.24x is currently well above the industry average of 20.12x, meaning it is trading at a higher price relative to its peers. If you like the action, you might want to keep an eye out for potential price drops in the future. Since Graphic Packaging Holding’s stock price is quite volatile, this could mean that it may go down (or rise even more) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator of how the stock is moving relative to the rest of the market.

What does the future of Graphic Packaging Holding look like?

NYSE: GPK Profit and Revenue Growth November 3, 2021

Investors looking for growth in their portfolio may want to consider a company’s prospects before buying its shares. Buying a large business with a solid outlook for a cheap price is always a good investment, so let’s also take a look at the future expectations of the business. With profits expected to more than double over the next two years, the future looks bright for Graphic Packaging Holding. It appears that a higher cash flow is expected for the stock, which should translate into a higher valuation of the stock.

What this means for you:

Are you a shareholder? It appears that the market has indeed taken into account the positive outlook for GPK, with stocks trading above industry price multiples. However, this raises another question: is now a good time to sell? If you think GPK should trade below its current price, selling high and buying it back when its price drops towards the industry’s PE ratio can be profitable. But before you make that decision, check to see if its fundamentals have changed.

Are you a potential investor? If you’ve been keeping your eye on GPK for a while, it might not be the best time to enter stock. The price has topped its industry peers, which means there is likely to be no more benefit from poor pricing. However, the positive outlook is encouraging for GPK, which means it is worth exploring other factors in order to take advantage of the next price drop.

In light of this, if you want to do more analysis on the business, it is essential to be aware of the risks involved. During our analysis, we found that Graphic Packaging Holding has 4 warning signs and it would be unwise to ignore them.

If you are no longer interested in Graphic Packaging Holding, you can use our free platform to view our list of over 50 other stocks with high growth potential.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.

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