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Are Investors Undervaluing Graphic Packaging Holding Company (GPK) Right Now?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is Graphic Packaging Holding Company (GPK - Free Report) . GPK is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 8.67 right now. For comparison, its industry sports an average P/E of 12.51. GPK's Forward P/E has been as high as 17.63 and as low as 8.29, with a median of 9.79, all within the past year.

Investors should also recognize that GPK has a P/B ratio of 3.39. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 8.69. Over the past year, GPK's P/B has been as high as 3.85 and as low as 2.95, with a median of 3.31.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. GPK has a P/S ratio of 0.75. This compares to its industry's average P/S of 0.81.

Finally, our model also underscores that GPK has a P/CF ratio of 6.96. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. GPK's P/CF compares to its industry's average P/CF of 23.05. Over the past year, GPK's P/CF has been as high as 9.25 and as low as 6.35, with a median of 8.38.

Value investors will likely look at more than just these metrics, but the above data helps show that Graphic Packaging Holding Company is likely undervalued currently. And when considering the strength of its earnings outlook, GPK sticks out at as one of the market's strongest value stocks.


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