Graphic Packaging: Margin Contraction In Q1, But The Focus Is On 2022 And Beyond

Summary

  • Graphic Packaging reported a disappointing Q1 due to the higher cost of raw materials and the negative impact of a winter storm.
  • I expect Q1 to have been the weakest quarter this year with a small improvement in Q2 and a stronger improvement in H2 2021 as price hikes will contribute.
  • Graphic Packaging is a 2022 story as the new plants will boost the operating cash flow while capex will drop by 40%.
  • Looking for a helping hand in the market? Members of European Small-Cap Ideas get exclusive ideas and guidance to navigate any climate. Learn More »
Manager en supervisor die inventaris in pakhuis nemen
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Introduction

I like the prospects of certain packaging companies and I have started to build a position in Graphic Packaging (NYSE:GPK). While the free cash flow result this year will likely still be low due to the investment

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This article was written by

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The Investment Doctor is a financial writer, highlighting European small-caps with a 5-7 year investment horizon. He strongly believes a portfolio should consist of a mixture of dividend and growth stocks.

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Analyst’s Disclosure:I am/we are long GPK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I also have written some out of the money put options on GPK.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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