Back to top

Image: Bigstock

GPK vs. PKG: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors interested in Containers - Paper and Packaging stocks are likely familiar with Graphic Packaging (GPK - Free Report) and Packaging Corp. (PKG - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, Graphic Packaging is sporting a Zacks Rank of #2 (Buy), while Packaging Corp. has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that GPK has an improving earnings outlook. But this is only part of the picture for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

GPK currently has a forward P/E ratio of 14.44, while PKG has a forward P/E of 20.56. We also note that GPK has a PEG ratio of 0.58. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. PKG currently has a PEG ratio of 4.11.

Another notable valuation metric for GPK is its P/B ratio of 2.59. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, PKG has a P/B of 4.22.

These are just a few of the metrics contributing to GPK's Value grade of A and PKG's Value grade of C.

GPK sticks out from PKG in both our Zacks Rank and Style Scores models, so value investors will likely feel that GPK is the better option right now.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Graphic Packaging Holding Company (GPK) - free report >>

Packaging Corporation of America (PKG) - free report >>

Published in