With a market cap of $12.9 billion, Smurfit Westrock Plc (SW) operates in the paper and packaging solutions industry. The Dublin, Ireland-based company manufactures and distributes a wide range of paper-based packaging products, serving markets such as food and beverage, e-commerce, retail, and consumer goods.
Companies valued at $10 billion or more are generally considered “large-cap” stocks and Smurfit Westrock fits this criterion perfectly. Smurfit Westrock is renowned for its integrated approach to packaging production, efficiently sourcing raw materials through its own mills and recycling operations while also maintaining a strong presence in educational publishing in Ireland.
However, the leading sustainable packaging provider reached its 52-week high of $50.60 on Sep. 27. Shares of Smurfit Westrock have risen 5.7% over the past five days, outpacing The Materials Select Sector SPDR Fund’s (XLB) 3% increase over the same time frame.
Longer term, SW stock is up 6.8% over the past month, outperforming XLB’s 4.1% gains over the same time frame.
SW stock has been trading above its 10-day and 20-day moving averages since late September.
Smurfit WestRock has outperformed due to positive sentiment from its recent merger, anticipated synergies, and a bullish outlook on the paper industry from management. However, the stock fell 4.1% following its Q2 earnings release on Jul 30 due to the miss in adjusted EPS of $0.69 against the analyst's estimate of $0.75, coupled with a significant 51% decline in net income to $132 million, primarily attributed to lower sales and transaction-related expenses from the merger. Additionally, the company's net sales decreased 3.5% year over year, which further raised concerns about its pricing power in the European market amid rising costs.
In comparison, rival Packaging Corporation of America (PKG) is underperforming SW. Shares of Packaging Corporation of America have gained 1.3% over the past five days and 5.3% over the past month.
Despite SW’s outperformance, analysts are cautiously optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 12 analysts covering the stock, and the mean price target of $56.33 suggests a premium of 12.5% to current levels.
On the date of publication, Sohini Mondal 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.
