Amcor PLC (AMCR, Financial) is currently facing a daily loss of 0.11%, but it has seen a 3-month gain of 1.92%. With an Earnings Per Share (EPS) of $0.65, investors may be pondering the true value of Amcor PLC. The stock is labeled as significantly undervalued according to the GuruFocus valuation. But what does this mean for potential investors? This article aims to answer that question by delving into a valuation analysis of Amcor PLC (AMCR). Read on to uncover the insights that could inform your investment decisions.
Company Introduction
Amcor PLC (AMCR, Financial) is a global powerhouse in the packaging industry, providing a wide array of solutions to sectors including food, beverage, pharmaceuticals, and personal care. With operations in over 40 countries and a presence in more than 200 locations, Amcor PLC is a significant player in the market. The company is divided into two main segments: flexibles and rigids, with flexibles contributing to about 80% of earnings. The current stock price of $9.35 stands in stark contrast to the GF Value of $13.27, suggesting that the stock may be significantly undervalued. This valuation discrepancy sets the stage for a deeper evaluation of Amcor PLC's intrinsic worth.
Summarize GF Value
The GF Value is a unique measure that reflects the intrinsic value of a stock, taking into account historical trading multiples, adjustments based on past performance and growth, and future business prospects. For Amcor PLC (AMCR, Financial), the GF Value suggests that the stock is significantly undervalued. The share price of $9.35, coupled with a market cap of $13.50 billion, indicates a potential for higher future returns compared to current business growth.
Given that Amcor PLC's stock is trading below the GF Value Line, it may represent an attractive opportunity for long-term investors seeking value. The company's financial strength and profitability further bolster the case for its undervaluation in the market.
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Financial Strength
Before investing, assessing the financial strength of a company is crucial. Amcor PLC's cash-to-debt ratio is lower than 83.96% of its peers in the Packaging & Containers industry, which could be a cause for concern. The company's overall financial strength is rated 4 out of 10, indicating that Amcor PLC's financial health could be better. This assessment is vital when considering the stock's potential for long-term investment.
Profitability and Growth
Investing in profitable companies is generally less risky, and Amcor PLC has shown consistent profitability over the past decade. The company's operating margin outperforms 73.25% of its industry peers, which is a positive sign. Furthermore, Amcor PLC's growth rates in revenue and EBITDA are commendable, surpassing more than half of the companies in its industry. These factors contribute to a profitability rank of 7 out of 10 by GuruFocus.
ROIC vs. WACC
Comparing a company's Return on Invested Capital (ROIC) with its Weighted Average Cost of Capital (WACC) provides insight into its value creation. Amcor PLC's ROIC exceeds its WACC, suggesting that the company is effectively generating value for its shareholders. This is an encouraging sign for investors looking for companies that can sustainably grow their wealth.
Conclusion
In summary, Amcor PLC (AMCR, Financial) appears to be significantly undervalued. The company's financial condition may require careful scrutiny, but its profitability and growth prospects are promising. With its growth ranking favorably within the industry, Amcor PLC could be a compelling choice for value investors. For a detailed look at Amcor PLC's financial history, interested parties can view its 30-Year Financials here.
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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.
