Stephen Simpson, CFA
Long only, growth at reasonable price, value, research analyst

Smart Deals And Smurfit Synergies Can Still Help Rock-Tenn

Rock-Tenn (RKT) is a fairly well-respected company in the paper packaging industry, but the company has struggled to generate appreciably better returns on capital over time. I suspect that is at least part of the reason that the company has lagged both International Paper (NYSE:IP) and Packaging Corp (NYSE:PKG) over the long term and other players like Graphic Packaging (NYSE:GPK) and MeadWestvaco (MWV) more recently.

The company took on a big operational challenge (and a lot of debt) when it acquired Smurfit-Stone at a generous price in 2011, but the company has likely not maxxed out the potential synergies and operational improvements here. I do have some concerns about the near-term health of the...

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