Is There an Opportunity in Graphic Packaging After 31% Drop and Industry Weakness in 2025?

Thinking about what to do with Graphic Packaging Holding stock? You are not alone. Whether you are reassessing your portfolio or eyeing potential opportunities, this stock likely caught your attention for good reason. After a sharp decline of 31.0% over the past year and a steeper 27.7% drop year-to-date, Graphic Packaging Holding does not look like the same high-flyer that delivered a 44.8% gain over the last five years. The past month saw another 10.0% fall, with a minor 0.4% uptick over the last week. Investors seem to be rethinking the company’s risk profile amid shifts in the packaging industry, global supply chain dynamics, and changes in consumer demand.

On the surface, those numbers might look challenging, but they may also open doors for value seekers. The real question now is whether the stock’s recent dip has made it a bargain or if there is more pain ahead. That is where valuation comes in. Interestingly, Graphic Packaging Holding scores an impressive 6 out of 6 on key undervaluation checks. By many traditional methods, the stock could be considerably undervalued right now.

So, how do we get to the bottom of this value story? Let us walk through the major valuation approaches. Later on, I will share an even more insightful way to judge if the company truly offers compelling value.

Why Graphic Packaging Holding is lagging behind its peers

Approach 1: Graphic Packaging Holding Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's true value by forecasting its future cash flows and discounting them to present-day dollars. For Graphic Packaging Holding, this approach involves analyzing the company’s projected Free Cash Flow (FCF) figures in millions of USD, reflecting both analyst opinions for the next five years and longer-term growth estimates.

Looking first at the latest numbers, Graphic Packaging Holding actually reported negative FCF over the last twelve months at -$93 million, which can be concerning. However, analyst estimates are more optimistic, forecasting FCF to reach $707 million in 2026 and grow steadily to $847 million by 2029. Beyond that, longer-range projections suggest FCF could surpass $1 billion by 2035, with each future year’s cash flow discounted appropriately for risk and time value.

Considering all these data points, the DCF model values the stock at $51.50 per share. The current market price suggests a 62.4% discount to this estimated intrinsic value, which may indicate the stock is significantly undervalued based on this method.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Graphic Packaging Holding.

Our Discounted Cash Flow (DCF) analysis suggests Graphic Packaging Holding is undervalued by 62.4%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Graphic Packaging Holding Price vs Earnings (PE Ratio)

The price-to-earnings (PE) ratio is a popular way to value profitable companies because it shows how much investors are willing to pay today for each dollar of current earnings. For established businesses like Graphic Packaging Holding, the PE ratio provides a simple lens for comparing value, especially when steady profits are in play.

What counts as a "fair" PE ratio depends on factors like the company’s growth prospects and risk profile. Fast-growing or less risky companies tend to command higher PE ratios, while slower growth or higher risks typically mean a lower multiple is justified.

Currently, Graphic Packaging Holding trades on a PE ratio of 10.75x. This is well below both the industry average of 16.17x for packaging firms and the average of its closest peers, which stands at 29.71x. On the surface, this suggests the stock is trading at a discount compared to its sector and competitors.

However, a simple comparison to industry averages does not capture the full picture. That is where Simply Wall St’s “Fair Ratio” comes in. Calculated at 18.22x for Graphic Packaging Holding, the Fair Ratio accounts for unique factors like its profitability, earnings growth outlook, market cap, and the specific risks and margins the company faces. This approach offers a far more reliable gauge of fair valuation than just looking at industry or peer numbers, which can mask important company-specific details.

Because Graphic Packaging Holding’s actual PE (10.75x) is significantly below its Fair Ratio (18.22x), the stock appears to be undervalued by this measure, not just compared to peers and industry but fundamentally as well.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Graphic Packaging Holding Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is your story about a company, connecting your reasoning and view of its future with your expectations for revenue, profits, and ultimately, fair value.

Narratives make investing more dynamic and personal by allowing you to spell out why you think a company is undervalued or overvalued, combining your unique perspective with financial forecasts and turning complex data into a clear, actionable story. On Simply Wall St’s Community page, you can easily create or follow Narratives, reviewing millions of user perspectives and updating yours as new news or earnings come in.

This approach makes decision-making straightforward, as you can compare your Narrative-driven Fair Value directly against the latest share price, helping you decide whether to buy, sell, or hold. Narratives update in real-time with important developments, ensuring your views stay relevant and informed.

For example, some investors believe Graphic Packaging Holding’s gains in recycled packaging will drive steady earnings growth and see fair value close to $32.90 per share, while more cautious investors, worried about volume risks and margin pressure, set fair value at just $23.00.

Do you think there's more to the story for Graphic Packaging Holding? Create your own Narrative to let the Community know!

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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