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Graphic Packaging and Gap have been highlighted as Zacks Bull and Bear of the Day
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For Immediate Release
Chicago, IL – May 9, 2022 – Zacks Equity Research shares Graphic Packaging Holding Co. (GPK - Free Report) as the Bull of the Day and Gap Inc. (GPS - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Advanced Micro Devices (AMD - Free Report) and Nvidia (NVDA - Free Report) .
Graphic Packaging Holding Co. is a sustainable paper-based packaging firm. GPK shares have outpaced the market over the last two years and the past decade. Better yet, Graphic Packaging stock has withstood the brutal market fall in 2022 to hit new highs in May, following strong first quarter results.
Diverse Packaging Portfolio
Graphic Packaging is a sustainable paper and fiber-based packaging firm with a portfolio of products that services companies in areas such as food, beverage, and foodservice, as well as personal care, household products, and pets. If products, from cereal and frozen foods to tooth paste and dog treats, are sold in a paper-based package, there is a good chance Graphic Packaging has a sustainable packaging solution for it.
Graphic Packaging completed its acquisition of AR Packaging in November. The deal helped Atlanta, Georgia-based GPK broaden its geographical reach because AR is one of Europe's leading packaging companies.
Graphic Packaging boasts that it is one of the biggest producers of folding cartons and paper-based foodservice products in the U.S. and now Europe. GPK also holds leading market positions in solid bleached sulfate paperboard, coated unbleached kraft paperboard, and coated-recycled paperboard.
Recent Growth and What's Next
Graphic Packaging works with countless recognizable brands for its folding cartons, cooking solutions, foodservice containers, cups, and more. GPK has grown its revenue at a rather solid clip over the years, with a few hiccups along the way. Graphic Packaging's revenue climbed 7% in 2020 and 9% last year.
Most recently, Graphic Packaging topped our Q1 earnings and revenue estimates in late April. Its sales climbed 36%, driven mostly by its acquisition, with organic revenue up 3%. And its adjusted quarterly earnings surged 71% YoY to top our estimate by 26%.
Graphic Packaging's FY22 and FY23 consensus earnings estimates have climbed 8% and 11%, respectively since its recent release. GPK is continuing to work through the broader supply chain challenges that are impacting the entire economy. Thankfully, it's been able to adjust its prices to offset what it called an "unprecedented inflationary environment."
Zacks estimates call for Graphic Packaging's revenue to jump 25% this year to $8.95 billion and then pop 2% higher in 2023, as the YoY comparisons normalize. GPK's adjusted FY22 earnings are projected to soar 87% to $2.13 a share, with FY23's figure set to climb another 10.4%.
Price & Valuation
As we mentioned up top, Graphic Packaging shares have outclimbed the S&P 500 over the last 10 years, up 375% vs. 322%. This run includes a 75% jump over the last two years vs. the benchmark's 50%. GPK shares have also popped over 10% in 2022, which looks fantastic compared to its industry's 3% drop and the market's 13% decline.
GPK hit a new record high of roughly $22.71 per share on Thursday, May 6. The stock's ability to drive straight through the current market storm while the Nasdaq falls deeper into a bear market should intrigue investors. The stock did pull back from those levels to hover around $21.76 a share at the close on Friday.
Graphic Packaging's under $25 a share price tag might attract investors looking for great low-price stocks. On top of its cheap stock price, GPK is trading right near decade-long lows at 10.0X forward 12-month earnings.
GPK's current forward earnings multiple represents a 50% discount to its own highs during the past ten years and 33% value vs. its own median. Graphic Packaging is also trading at a 29% discount to its industry right now. Its valuation is quite impressive given that GPK stock has soared 374% in the last 10 years and just hit new highs.
Bottom Line
Wall Street has clearly gravitated to GPK for its stability over an extended period of time. Graphic Packaging's recent climb also comes as investors search for stable companies with great value, as people dump growth-focused tech stocks amid rising interest rates.
Graphic Packaging's earnings revisions activity helps it land a Zacks Rank #1 (Strong Buy) right now. And eight of the dozen brokerage recommendations Zacks has are "Strong Buys." Graphic Packaging also pays a dividend that's yielding 1.4% at the moment, which is good enough to match the S&P 500.
Gap Inc. stock skyrocketed off its covid lows on the back of larger market exuberance and its own sales comeback. But GPS, like many early highflyers during that run, simply went way too far, too fast.
The retailer also ran into supply chain constraints that have continued to drag down the company that owns Gap, Old Navy, and more.
Struggling in a Modern Retail World
Gap is an icon in the apparel world that initially rose to power on the back of denim. Today, the firm's portfolio of retail brands includes its namesake, Old Navy, Banana Republic, and Athleta, which competes against the likes of Lululemon in the athleisure realm.
The company has struggled to maintain consistent sales growth in the fickle fashion world. Plus, GPS now faces more competition than ever for customers from countless small e-commerce retailers that have found success through social media and direct marketing. Gap's revenue has dipped on a YoY basis in four out of the last seven years, including a 1.2% drop in 2019 and a 16% fall during the Covid-hit 2020.
Gap did bounce back in a huge way in 2021, posting 21% revenue growth to climb above its pre-pandemic totals. Unfortunately, the firm is being hit hard by inventory setbacks as global supply chains remain clogged.
GPS shares tumbled again in April after the company lowered its Q1 guidance and announced the departure of Old Navy's chief executive. The company cited "macro-economic dynamics as well as the execution challenges at the Old Navy brand" as the reason for the subdued outlook.
Gap's first quarter FY22 financial results are due out on May 26. Zacks estimates call for its first quarter revenue to slide 14% YoY and for it to swing from adjusted earnings of +$0.48 a share in the prior-year period to a -$0.09 a share loss. Prior to the updated guidance on April 21, Gap's Q1 consensus stood at +$0.05 a share.
Bottom Line
The nearby chart showcases how far not only its first quarter estimate has fallen, but also its FY22 and FY23 outlooks—down 28% and 22%, respectively. The downward earnings revisions trends help Gap stock land a Zacks Rank #5 (Strong Sell) right now. Plus, the Retail - Apparel and Shoes space is in the bottom 33% of over 250 Zacks industries.
Gap stock has plummeted over 60% in the past year, alongside its industry's 35% downturn. And it might be best to stay away from GPS shares, even at these prices, at least until after its upcoming earnings results.
Additional content:
AMD vs. NVIDIA: Which Chip-Maker Should You Buy?
The semiconductor arena is one of the most exciting and innovative environments that has rewarded investors handsomely over the last several years. Semiconductors, also referred to as microchips, are a bright spot of modern technology – they exist in almost every aspect of our lives. From freezers to computers, they allow the world to keep spinning.
A hawkish Fed, supply-chain issues, and a widespread microchip shortage have played spoilsport for most semiconductor-related and technology companies. These once high-flying stocks that displayed zero signs of ever slowing down have almost come to a complete halt in 2022.
Two giants in the semiconductor arena –Advanced Micro Devices and Nvidia – have quickly become two of the go-to stocks when investing in this lucrative space. 2022 has not been kind to either of these companies, as illustrated in the chart below that compares the two while blending in the S&P 500 for a benchmark.
Both NVDA and AMD have had their valuations slashed. Overall, it seems that paying extremely high valuation multiples for these stocks is over. Down well off their 2021 highs, it raises a valid question – which company is the better investment moving forward? Let's look at forecasted growth rates and valuation metrics to paint a clearer picture.
Nvidia
Nvidia is the worldwide leader in visual computing technologies and the inventor of the highly successful graphic processing unit (GPU).
Nvidia shares have been sent down the drain, nearly 45% off all-time highs of approximately $335 per share in late November 2021. The adverse price action has caused its forward-earnings multiple to slide down to 40.3X, well below its 93.5X high in 2021 and respectfully below its median of 49.9X over the last five years. Additionally, the current value reflects a 117% premium relative to the S&P 500's forward P/E ratio of 18.5X and is the lowest that it has been since March of 2020.
Over the last 60 days, one analyst has upped their outlook for the upcoming quarterly report, although the Consensus Estimate Trend remains unchanged, forecasting earnings of $1.30 per share. Over its last four quarterly reports, the company has acquired a trailing average EPS surprise of a respectable 7%, and in its latest quarter, the company exceeded the Zacks Consensus Estimate by 8%.
Looking forward, the current Zacks Consensus Estimate for current fiscal year earnings sits at $5.56 per share, reflecting a sizable 25% jump in earnings year-over-year. Building on that, earnings are forecasted to grow by 14% for the next fiscal year. Additionally, NVDA is forecasted to expand its bottom line by 17% over the next three to five years.
Revenue estimates are also looking mightily strong; NVDA is forecasted to rake in $34.6 billion in the current fiscal year, a notable 29% expansion in the top line year-over-year.
NVDA is currently a Zacks Rank #3 (Hold) with an overall VGM Score of a B.
Advanced Micro Devices
Advanced Micro Devices is a multinational semiconductor company that develops computer processors and related technologies for business and consumer markets.
Advanced Micro Devices shares have also had a brutal stretch in the market, down 42% since reaching all-time highs of approximately $162 per share in late November 2021. The tough stretch has caused its forward-earnings multiple to slip down to 25.2X, an absolute fraction of its 67.8X high in 2021 and well below the median of 45.5X over the last five years. Additionally, the valuation metric represents a 36% premium relative to the S&P 500's value and is the lowest since April 2018.
Two analysts have recently positively revised their upcoming quarterly estimates, boosting the Consensus Estimate Trend by 2.1% and reflecting quarterly earnings of $0.97 per share. Throughout its last four quarterly reports, the company has an average EPS surprise in the double-digits of 19%, and in its latest quarter, the company smoked the Zacks Consensus Estimate of $0.91 per share by a considerable 24% and reported quarterly EPS of $1.13.
Pivoting to forecasted growth rates for the current year, the consensus EPS estimate currently sits at $4.06, reflecting a very sizable year-over-year 50% growth in earnings. The Zacks Consensus Estimate has earnings growing by roughly 18% year-over-year for AMD's next fiscal year. Furthermore, the company's bottom line is expected to expand by 33% over the next three to five years.
Like NVDA, AMD's top-line forecast for the current year shows signs of strength. The Zacks Consensus Estimate has AMD raking in nearly $25 billion in FY22, a 50% increase from the previous year's revenue value of $16.4 billion.
AMD is currently a Zacks Rank #3 (Hold) with an overall VGM Score of an A.
Final Decision
It's not easy to pick a favorite between these two chip giants. While both companies are very thrilling and innovative investments, I believe that AMD is currently the better microchip stock to buy right now, and here's why – AMD shares have displayed a higher level of defense throughout the tech meltdown, the company is trading at more attractive valuation levels, has higher forecasted earnings growth, and has a higher overall VGM score. Additionally, AMD's long-term earnings growth is forecasted to be much higher than Nvidia's.
Why Haven't You Looked at Zacks' Top Stocks?
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Graphic Packaging and Gap have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – May 9, 2022 – Zacks Equity Research shares Graphic Packaging Holding Co. (GPK - Free Report) as the Bull of the Day and Gap Inc. (GPS - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Advanced Micro Devices (AMD - Free Report) and Nvidia (NVDA - Free Report) .
Here is a synopsis of all four stocks:
Bull of the Day:
Graphic Packaging Holding Co. is a sustainable paper-based packaging firm. GPK shares have outpaced the market over the last two years and the past decade. Better yet, Graphic Packaging stock has withstood the brutal market fall in 2022 to hit new highs in May, following strong first quarter results.
Diverse Packaging Portfolio
Graphic Packaging is a sustainable paper and fiber-based packaging firm with a portfolio of products that services companies in areas such as food, beverage, and foodservice, as well as personal care, household products, and pets. If products, from cereal and frozen foods to tooth paste and dog treats, are sold in a paper-based package, there is a good chance Graphic Packaging has a sustainable packaging solution for it.
Graphic Packaging completed its acquisition of AR Packaging in November. The deal helped Atlanta, Georgia-based GPK broaden its geographical reach because AR is one of Europe's leading packaging companies.
Graphic Packaging boasts that it is one of the biggest producers of folding cartons and paper-based foodservice products in the U.S. and now Europe. GPK also holds leading market positions in solid bleached sulfate paperboard, coated unbleached kraft paperboard, and coated-recycled paperboard.
Recent Growth and What's Next
Graphic Packaging works with countless recognizable brands for its folding cartons, cooking solutions, foodservice containers, cups, and more. GPK has grown its revenue at a rather solid clip over the years, with a few hiccups along the way. Graphic Packaging's revenue climbed 7% in 2020 and 9% last year.
Most recently, Graphic Packaging topped our Q1 earnings and revenue estimates in late April. Its sales climbed 36%, driven mostly by its acquisition, with organic revenue up 3%. And its adjusted quarterly earnings surged 71% YoY to top our estimate by 26%.
Graphic Packaging's FY22 and FY23 consensus earnings estimates have climbed 8% and 11%, respectively since its recent release. GPK is continuing to work through the broader supply chain challenges that are impacting the entire economy. Thankfully, it's been able to adjust its prices to offset what it called an "unprecedented inflationary environment."
Zacks estimates call for Graphic Packaging's revenue to jump 25% this year to $8.95 billion and then pop 2% higher in 2023, as the YoY comparisons normalize. GPK's adjusted FY22 earnings are projected to soar 87% to $2.13 a share, with FY23's figure set to climb another 10.4%.
Price & Valuation
As we mentioned up top, Graphic Packaging shares have outclimbed the S&P 500 over the last 10 years, up 375% vs. 322%. This run includes a 75% jump over the last two years vs. the benchmark's 50%. GPK shares have also popped over 10% in 2022, which looks fantastic compared to its industry's 3% drop and the market's 13% decline.
GPK hit a new record high of roughly $22.71 per share on Thursday, May 6. The stock's ability to drive straight through the current market storm while the Nasdaq falls deeper into a bear market should intrigue investors. The stock did pull back from those levels to hover around $21.76 a share at the close on Friday.
Graphic Packaging's under $25 a share price tag might attract investors looking for great low-price stocks. On top of its cheap stock price, GPK is trading right near decade-long lows at 10.0X forward 12-month earnings.
GPK's current forward earnings multiple represents a 50% discount to its own highs during the past ten years and 33% value vs. its own median. Graphic Packaging is also trading at a 29% discount to its industry right now. Its valuation is quite impressive given that GPK stock has soared 374% in the last 10 years and just hit new highs.
Bottom Line
Wall Street has clearly gravitated to GPK for its stability over an extended period of time. Graphic Packaging's recent climb also comes as investors search for stable companies with great value, as people dump growth-focused tech stocks amid rising interest rates.
Graphic Packaging's earnings revisions activity helps it land a Zacks Rank #1 (Strong Buy) right now. And eight of the dozen brokerage recommendations Zacks has are "Strong Buys." Graphic Packaging also pays a dividend that's yielding 1.4% at the moment, which is good enough to match the S&P 500.
Bear of the Day:
Gap Inc. stock skyrocketed off its covid lows on the back of larger market exuberance and its own sales comeback. But GPS, like many early highflyers during that run, simply went way too far, too fast.
The retailer also ran into supply chain constraints that have continued to drag down the company that owns Gap, Old Navy, and more.
Struggling in a Modern Retail World
Gap is an icon in the apparel world that initially rose to power on the back of denim. Today, the firm's portfolio of retail brands includes its namesake, Old Navy, Banana Republic, and Athleta, which competes against the likes of Lululemon in the athleisure realm.
The company has struggled to maintain consistent sales growth in the fickle fashion world. Plus, GPS now faces more competition than ever for customers from countless small e-commerce retailers that have found success through social media and direct marketing. Gap's revenue has dipped on a YoY basis in four out of the last seven years, including a 1.2% drop in 2019 and a 16% fall during the Covid-hit 2020.
Gap did bounce back in a huge way in 2021, posting 21% revenue growth to climb above its pre-pandemic totals. Unfortunately, the firm is being hit hard by inventory setbacks as global supply chains remain clogged.
GPS shares tumbled again in April after the company lowered its Q1 guidance and announced the departure of Old Navy's chief executive. The company cited "macro-economic dynamics as well as the execution challenges at the Old Navy brand" as the reason for the subdued outlook.
Gap's first quarter FY22 financial results are due out on May 26. Zacks estimates call for its first quarter revenue to slide 14% YoY and for it to swing from adjusted earnings of +$0.48 a share in the prior-year period to a -$0.09 a share loss. Prior to the updated guidance on April 21, Gap's Q1 consensus stood at +$0.05 a share.
Bottom Line
The nearby chart showcases how far not only its first quarter estimate has fallen, but also its FY22 and FY23 outlooks—down 28% and 22%, respectively. The downward earnings revisions trends help Gap stock land a Zacks Rank #5 (Strong Sell) right now. Plus, the Retail - Apparel and Shoes space is in the bottom 33% of over 250 Zacks industries.
Gap stock has plummeted over 60% in the past year, alongside its industry's 35% downturn. And it might be best to stay away from GPS shares, even at these prices, at least until after its upcoming earnings results.
Additional content:
AMD vs. NVIDIA: Which Chip-Maker Should You Buy?
The semiconductor arena is one of the most exciting and innovative environments that has rewarded investors handsomely over the last several years. Semiconductors, also referred to as microchips, are a bright spot of modern technology – they exist in almost every aspect of our lives. From freezers to computers, they allow the world to keep spinning.
A hawkish Fed, supply-chain issues, and a widespread microchip shortage have played spoilsport for most semiconductor-related and technology companies. These once high-flying stocks that displayed zero signs of ever slowing down have almost come to a complete halt in 2022.
Two giants in the semiconductor arena –Advanced Micro Devices and Nvidia – have quickly become two of the go-to stocks when investing in this lucrative space. 2022 has not been kind to either of these companies, as illustrated in the chart below that compares the two while blending in the S&P 500 for a benchmark.
Both NVDA and AMD have had their valuations slashed. Overall, it seems that paying extremely high valuation multiples for these stocks is over. Down well off their 2021 highs, it raises a valid question – which company is the better investment moving forward? Let's look at forecasted growth rates and valuation metrics to paint a clearer picture.
Nvidia
Nvidia is the worldwide leader in visual computing technologies and the inventor of the highly successful graphic processing unit (GPU).
Nvidia shares have been sent down the drain, nearly 45% off all-time highs of approximately $335 per share in late November 2021. The adverse price action has caused its forward-earnings multiple to slide down to 40.3X, well below its 93.5X high in 2021 and respectfully below its median of 49.9X over the last five years. Additionally, the current value reflects a 117% premium relative to the S&P 500's forward P/E ratio of 18.5X and is the lowest that it has been since March of 2020.
Over the last 60 days, one analyst has upped their outlook for the upcoming quarterly report, although the Consensus Estimate Trend remains unchanged, forecasting earnings of $1.30 per share. Over its last four quarterly reports, the company has acquired a trailing average EPS surprise of a respectable 7%, and in its latest quarter, the company exceeded the Zacks Consensus Estimate by 8%.
Looking forward, the current Zacks Consensus Estimate for current fiscal year earnings sits at $5.56 per share, reflecting a sizable 25% jump in earnings year-over-year. Building on that, earnings are forecasted to grow by 14% for the next fiscal year. Additionally, NVDA is forecasted to expand its bottom line by 17% over the next three to five years.
Revenue estimates are also looking mightily strong; NVDA is forecasted to rake in $34.6 billion in the current fiscal year, a notable 29% expansion in the top line year-over-year.
NVDA is currently a Zacks Rank #3 (Hold) with an overall VGM Score of a B.
Advanced Micro Devices
Advanced Micro Devices is a multinational semiconductor company that develops computer processors and related technologies for business and consumer markets.
Advanced Micro Devices shares have also had a brutal stretch in the market, down 42% since reaching all-time highs of approximately $162 per share in late November 2021. The tough stretch has caused its forward-earnings multiple to slip down to 25.2X, an absolute fraction of its 67.8X high in 2021 and well below the median of 45.5X over the last five years. Additionally, the valuation metric represents a 36% premium relative to the S&P 500's value and is the lowest since April 2018.
Two analysts have recently positively revised their upcoming quarterly estimates, boosting the Consensus Estimate Trend by 2.1% and reflecting quarterly earnings of $0.97 per share. Throughout its last four quarterly reports, the company has an average EPS surprise in the double-digits of 19%, and in its latest quarter, the company smoked the Zacks Consensus Estimate of $0.91 per share by a considerable 24% and reported quarterly EPS of $1.13.
Pivoting to forecasted growth rates for the current year, the consensus EPS estimate currently sits at $4.06, reflecting a very sizable year-over-year 50% growth in earnings. The Zacks Consensus Estimate has earnings growing by roughly 18% year-over-year for AMD's next fiscal year. Furthermore, the company's bottom line is expected to expand by 33% over the next three to five years.
Like NVDA, AMD's top-line forecast for the current year shows signs of strength. The Zacks Consensus Estimate has AMD raking in nearly $25 billion in FY22, a 50% increase from the previous year's revenue value of $16.4 billion.
AMD is currently a Zacks Rank #3 (Hold) with an overall VGM Score of an A.
Final Decision
It's not easy to pick a favorite between these two chip giants. While both companies are very thrilling and innovative investments, I believe that AMD is currently the better microchip stock to buy right now, and here's why – AMD shares have displayed a higher level of defense throughout the tech meltdown, the company is trading at more attractive valuation levels, has higher forecasted earnings growth, and has a higher overall VGM score. Additionally, AMD's long-term earnings growth is forecasted to be much higher than Nvidia's.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.