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Bear of the Day: Graphic Packaging Holding Company (GPK)
Graphic Packaging Holding Company (GPK - Free Report) is a sustainable paper and fiber-based packaging firm that fell short of earnings expectations in early February and provided disappointing guidance.
Graphic Packaging’s recent downward earnings revisions are part of a steady decline over the last year-plus as the economy cools and inflation remains.
GPK Stock 101
Graphic Packaging’s portfolio of paper packaging products are essential cogs in the economy, serving clients in industries ranging from food, beverages, and food service to personal care, household products, pets, and beyond.
GPK’s paper-based packaging solutions include folding cartons, cooking solutions, food service containers, cups, and more.
The Atlanta, Georgia-headquartered firm works with plenty of recognizable brands, and it expanded its reach in the post-Covid world through some key acquisitions.
Graphic Packaging’s purchase of AR Packaging Group in 2021 boosted its geographical reach because AR was one of Europe’s leading packaging companies.
Image Source: Zacks Investment Research
Graphic Packaging came up against a tough to compete against stretch of growth. GPK’s revenue fell 7% in 2024 after flat 2023 sales. The paper packaging giant’s adjusted earnings dropped from $2.91 in 2023 to $2.49 a share in FY24.
Graphic Packaging’s consensus 2025 earnings estimate fell another 7% following its February 4 release, with its FY26 figure 6% lower.
The post-release downtrend lands GPK a Zacks Rank #5 (Strong Sell) and marks the extension of a negative trend that began in 2023. “The past two years have presented unusual volume challenges for the industry and our customers,” CEO Michael Doss said in prepared Q4 remarks.
“Customer destocking is largely over, but consumers are stretched and searching for value in their everyday purchases.”
Stay Away from GPK Stock for Now?
Graphic Packaging stock has climbed just 14% in the past two years compared to the S&P 500’s 52% run. The benchmark has also doubled GPK stock in the last decade, despite Graphic Packaging’s 100% surge in the trailing five years.
GPK’s long-term outlook remains intact. The company also raised its quarterly dividend by 10% effective Q1 2025. Still, investors might want to stay away from Graphic Packaging until it provides upbeat earnings guidance.