Graphic Packaging Holding (GPK) Margin Compression Challenges Bullish Earnings Growth Narratives

Graphic Packaging Holding (GPK) has just posted its FY 2025 third quarter numbers, with revenue of about US$2.2 billion, basic EPS of US$0.48 and net income of US$142 million, while trailing 12 month figures show revenue of US$8.6 billion, EPS of US$1.70 and net income of US$511 million. Over the past few quarters, revenue has moved in a tight band from US$2.09 billion in Q4 2024 to between US$2.12 billion and US$2.20 billion through 2025, while quarterly EPS has ranged from US$0.35 to US$0.62 across the six most recent periods. With net profit margins easing back to 5.9% over the last year from 8%, the latest results put the spotlight firmly on how much earnings power the company can sustain from here.

See our full analysis for Graphic Packaging Holding.

With the headline numbers set, the next step is to line these results up against the widely followed narratives around growth, margins and income risk to see which stories hold up and which ones start to look stretched.

Curious how numbers become stories that shape markets? Explore Community Narratives

Margins Slip as TTM Profit Falls from US$721m to US$511m

• Over the last six trailing 12 month snapshots, net income eased from US$721 million at FY 2024 Q2 to US$511 million at FY 2025 Q3, with net profit margin at 5.9% compared with 8% a year earlier.
• Bears who focus on earnings pressure can point to this US$210 million TTM profit gap and the margin move from 8% to 5.9%. That sits alongside a five year history of 23.5% annual earnings growth, which
  • highlights the tension between the recent margin squeeze and a longer track record that has previously supported a stronger profitability profile, and
  • leaves room for debate on whether the latest 12 month period or the multi year pattern better reflects the company’s earnings power.

Revenue Holds Around US$8.6b While TTM EPS Slips to US$1.70

• While trailing 12 month revenue moved modestly from US$9.1b at FY 2024 Q2 to US$8.6b at FY 2025 Q3, TTM basic EPS over the same snapshots stepped down from US$2.35 to US$1.70 even as quarterly revenue stayed between US$2.09 billion and US$2.24 billion.
• What stands out for a bearish narrative is that revenue growth of about 1.7% per year has not translated into EPS resilience recently, given the TTM EPS move from about US$2.35 to US$1.70. At the same time,
  • analyst style forecasts in the data still point to around 9.9% annual earnings growth, suggesting expectations for earnings to track differently from the more muted revenue line, and
  • this gap between softer trailing EPS and projected growth is exactly where cautious investors may question how much of the prior 23.5% annual earnings growth rate is repeatable.

P/E of 7.2x vs Industry 20.2x with Cash Flow Cover Risks

• The shares trade on a trailing P/E of 7.2x compared with a peer average of 24.5x and an industry average of 20.2x. The DCF fair value in the data is US$28.84 against a current share price of US$12.42, and the dividend yield is 3.54% even though that dividend is not well covered by free cash flow and debt is not well covered by operating cash flow.
• For a bullish angle, supporters often point to this wide gap between the US$12.42 share price and the US$28.84 DCF fair value alongside the low 7.2x P/E, arguing the market is pricing in the margin and cash flow issues very heavily. However,
  • critics highlight that weaker cash coverage of both the dividend and debt means income and leverage risks sit alongside that apparent valuation upside, and
  • the trade off between a 3.54% yield, below peer multiples and these coverage pressures is likely to be a key focus for anyone weighing up the balance of risk and reward.

Stay with this story as valuation, margins and cash coverage evolve off this base of a 7.2x P/E and US$12.42 share price, then see how different investors are framing the next chapter in the numbers. Curious how numbers become stories that shape markets? Explore Community Narratives

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Graphic Packaging Holding's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

Explore Alternatives

GPK’s weaker recent margins, softer TTM EPS and tight cash coverage for both dividends and debt raise clear questions about income resilience and balance sheet strength.

If you want companies where those pressure points are less of a concern, use our solid balance sheet and fundamentals stocks screener (388 results) to focus on businesses with stronger financial footing and steadier cash support.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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