/WestRock%20Co%20%20sign%20by-JHVEPhoto%20via%20Shutterstock.jpg)
Ireland-based Smurfit Westrock Plc (SW) manufactures, distributes, and sells containerboard, corrugated containers, and other paper-based packaging products. With a market cap of $11 billion, Smurfit Westrock’s operations span various European, North America, South America, and Asia-Pacific countries.
The packaging company has significantly underperformed the broader market over the past month. SW stock is down 12.9% over the past month, compared to the S&P 500 Index’s ($SPX) nearly 2% decline during the same time frame.
Zooming in further, SW has also lagged behind the S&P 500 Materials Sector SPDR ’s (XLB) 1.6% decline over the past month.
Shares of Smurfit Westrock dipped 4.1% following the release of its Q2 earnings on Jul. 30. The company reported a 3.5% yearly drop in sales to $3 billion and a staggering 50.6% decline in net profit to $132 million compared to the year-ago quarter. Additionally, its EPS of $0.69 fell short of consensus estimates by 8%, shaking investor confidence. The $60 million transaction-related expenses associated with the merger of Smurfit Kappa and WestRock incurred during the previous quarter is the primary factor behind the decreased profitability.
For the current fiscal year, ending in December, analysts expect Smurfit Westrock’s EPS to drop by 12.3% year over year to $2.65. The company’s earnings surprise history is mixed. It surpassed the consensus EPS projections in two of the past four quarters while missing the projections on two other occasions.
Among the 11 analysts covering the SW stock, the consensus rating is a “Moderate Buy.” That’s based on six “Strong Buy” ratings, one “Moderate Buy,” and four “Holds.”
This configuration is slightly more bullish than a month ago when five analysts recommended a “Strong Buy” rating.
On Jul. 31, RBC Capital analyst Matt McKellar maintained a “Hold” rating on Smurfit Westrock and set a price target of $52.
SW’s mean price target of $55.88 represents a premium of 30.3% from current price levels. The Street-high target of $65 indicates a potential upside of 51.5%.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
