Amcor PLC (AMCR, Financial) has recently seen a daily decline of 1.32% and a 3-month loss of 6.42%, leaving investors to question the stock's valuation. With an Earnings Per Share (EPS) of $0.65, the focus turns to whether Amcor PLC is significantly undervalued. The following analysis will explore this in detail, encouraging investors to consider the potential long-term value of Amcor PLC.
Company Introduction
Amcor PLC operates globally in the packaging industry, serving sectors from food and beverage to pharmaceuticals and personal care. With a presence in over 40 countries and 200 locations, Amcor PLC's business is divided into two segments: flexibles, contributing approximately 80% of earnings, and rigids, accounting for the remaining 20%. The company's stock price currently stands at $8.95 per share, with a market capitalization of $12.90 billion, which is intriguing when compared to the GF Value of $13.28, suggesting a potential undervaluation.
Summarize GF Value
The GF Value is a unique measure of the intrinsic value of a stock, considering historical trading multiples, the company's past performance, and future business estimates. If Amcor PLC's stock price is significantly below the GF Value Line, as it is now, it indicates that the stock may be significantly undervalued and could offer higher future returns. This assessment suggests that Amcor PLC's stock, with its current price of $8.95 per share and a market cap of $12.90 billion, may present a substantial investment opportunity.
Financial Strength
When assessing Amcor PLC's financial strength, it is crucial to consider ratios such as cash-to-debt, which currently stands at 0.07. This figure places Amcor PLC in a less favorable position than 82.75% of its industry peers. The company's overall financial strength is rated 4 out of 10, indicating potential concerns regarding its financial robustness.
Profitability and Growth
Amcor PLC has consistently demonstrated profitability over the past decade, with a 12-month revenue of $14.40 billion and an Earnings Per Share (EPS) of $0.65. The company's operating margin outperforms 72.58% of its competitors in the Packaging & Containers industry, earning it a fair profitability rank. Furthermore, Amcor PLC's growth metrics, such as its 3-year average revenue and EBITDA growth rates, surpass more than half of the industry's companies, highlighting its competitive edge in growth.
ROIC vs WACC
An analysis of Amcor PLC's profitability can also be conducted by comparing its Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC). With an ROIC of 8.52 and a WACC of 6.88, Amcor PLC is effectively generating cash flow relative to its capital investment, which is a positive indicator for investors.
Conclusion
In conclusion, Amcor PLC's stock appears to be significantly undervalued. Although the company's financial condition raises some concerns, its profitability and growth prospects are promising. With its growth ranking better than 61.49% of companies in the Packaging & Containers industry, Amcor PLC presents an intriguing opportunity for value investors.
To learn more about Amcor PLC stock, you can check out its 30-Year Financials here.
To discover high-quality companies that may deliver above-average returns, please check out the GuruFocus High Quality Low Capex Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
