Should Investors Revisit Smurfit Westrock After a 29% Drop in 2025?

• Wondering if Smurfit Westrock might finally be offering value after its recent share price drop? You are not alone, as plenty of investors are looking closely at this stock.
• The stock has slid notably, with an 11.3% dip in the last week and a 10.4% loss over the past month. This adds up to a 29.4% decline year-to-date.
• Recent news around packaging industry shifts, including evolving demand for sustainable materials and ongoing merger integration developments, has caught analysts' attention. These events have played a part in shaping the market's perception of Smurfit Westrock's future prospects.
• On our valuation checklist, Smurfit Westrock scores 3 out of 6 for being undervalued. There are mixed signals to be aware of. Next, we will break down the main valuation approaches and hint at a smarter, more comprehensive way to judge the company's true worth.

Find out why Smurfit Westrock's -21.9% return over the last year is lagging behind its peers.

Approach 1: Smurfit Westrock Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is a classic valuation approach that estimates a company’s worth by projecting its future cash flows and discounting them back to today’s value. This method helps investors gauge if the stock price reflects the company’s long-term earnings power.

For Smurfit Westrock, the latest twelve months saw it post a Free Cash Flow (FCF) just under break-even, at -$1.18 million. However, analyst forecasts suggest significant growth ahead, with expectations for FCF to climb to roughly $2.85 billion by 2029. These projections rely on analyst reports for the next five years, while subsequent years use more general growth estimates as provided by Simply Wall St.

Based on these calculations, the DCF model assigns Smurfit Westrock an estimated intrinsic value of $98.38 per share. With the current share price sitting well below this figure, the DCF indicates the stock is trading at a 61.5% discount to its fair value. This substantial gap signals a potentially attractive situation for value-focused investors.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Smurfit Westrock is undervalued by 61.5%. Track this in your watchlist or portfolio, or discover 848 more undervalued stocks based on cash flows.

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

Approach 2: Smurfit Westrock Price vs Earnings

The Price-to-Earnings (PE) ratio is a common and useful metric for valuing profitable companies, as it shows how much investors are willing to pay for each dollar of earnings. For businesses like Smurfit Westrock that generate positive net income, the PE ratio captures market sentiment about future growth potential and current profitability.

Growth expectations and perceived risk play a major role in what constitutes a "normal" or "fair" PE ratio for any stock. Companies expected to grow earnings quickly or those seen as having lower business risk typically command higher PE multiples, while slower-growing or riskier firms trade at lower ratios.

Smurfit Westrock currently trades on a PE ratio of 56x, noticeably above the Packaging industry average of 16x and the peer group average of 21x. At first glance, this points to a premium valuation. However, the proprietary Simply Wall St “Fair Ratio” for Smurfit Westrock is calculated at around 38x. This Fair Ratio draws from a broader set of factors, including expected earnings growth, profit margins, industry trends, company size, and certain risk factors. This offers a more nuanced benchmark than simply comparing with sector peers or averages.

Comparing the actual PE of 56x with the Fair Ratio of 38x, the stock trades well above what these fundamentals would typically justify. This indicates Smurfit Westrock’s shares are currently overvalued by this measure.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1383 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Smurfit Westrock Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply your personal, reasoned story about a company's future, where you connect what you know and believe about Smurfit Westrock, such as expected sales growth, margin shifts, and industry trends, to the numbers you use in your forecasts, and ultimately to your own estimate of fair value.

This approach goes beyond traditional ratios by allowing you to ground your investment view in real events and current business changes. Narratives help bridge the gap between a company’s evolving business story and the financial forecasts that matter for valuation, turning complex numbers into actionable insight.

On Simply Wall St’s Community page, millions of investors are already using Narratives to document their perspectives and update valuations as new information, such as earnings results or major news, becomes available. With each Narrative, you can instantly see how fair value changes and compare it to the current share price so you can make informed buy or sell decisions.

For example, some investors expect margin and revenue improvement to drive fair value as high as $63, while others, factoring in risks like overcapacity or cost pressures, set it as low as $46. Your Narrative determines which story and fair value you see.

Do you think there's more to the story for Smurfit Westrock? Head over to our Community to see what others are saying!

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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