Stock Analysis
- United States
- /
- Packaging
- /
- NYSE:CCK
Is Crown Holdings, Inc. (NYSE:CCK) Potentially Undervalued?
Crown Holdings, Inc. (NYSE:CCK) saw a decent share price growth in the teens level on the NYSE over the last few months. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Crown Holdings’s outlook and valuation to see if the opportunity still exists.
Check out our latest analysis for Crown Holdings
What is Crown Holdings worth?
Good news, investors! Crown Holdings is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Crown Holdings’s ratio of 22.14x is below its peer average of 28.26x, which indicates the stock is trading at a lower price compared to the Packaging industry. However, given that Crown Holdings’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of Crown Holdings look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Crown Holdings' earnings over the next few years are expected to increase by 72%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? Since CCK is currently below the industry PE ratio, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.
Are you a potential investor? If you’ve been keeping an eye on CCK for a while, now might be the time to make a leap. Its buoyant future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy CCK. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.
So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Crown Holdings.
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What are the risks and opportunities for Crown Holdings?
Crown Holdings, Inc. designs, manufactures, and sells packaging products and equipment for consumer goods and industrial products in the Americas, Europe, and the Asia Pacific.
Rewards
Trading at 56.9% below our estimate of its fair value
Earnings are forecast to grow 17.18% per year
Risks
Debt is not well covered by operating cash flow
Further research on
Crown Holdings
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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About NYSE:CCK
Crown Holdings
Crown Holdings, Inc. designs, manufactures, and sells packaging products and equipment for consumer goods and industrial products in the Americas, Europe, and the Asia Pacific.
Undervalued with reasonable growth potential.
