Long term stock
Stock price $43.35 (As of 12/31/20) Price Target (6-12 Months): $51.00 Recommendation: Outperform
52 Week High-Low: $45.58 - $21.50
Beta: 1.36
Market Cap: $11.6 B
Dividend / Div Yld: $0.80 / 1.8%
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WestRock reports financial results in the following reportable segments:
1. Corrugated Packaging Segment (65% of total sales in fiscal 2020)
2. Consumer Packaging Segment (34.9% of total sales in fiscal 2020)
3. Land and Development Segment (0.1% of total sales in fiscal 2020)
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Financial Position
As of fiscal 2020 end, cash and cash equivalents were $251 million, significantly up from the $152 million witnessed at the end of fiscal 2019. Total debt was $9.4 billion at the end of fiscal 2020 compared with the $10.2 billion recorded at the end of fiscal 2019. Cash flow from operations was $2,071 million in fiscal 2020 compared with the prior fiscal’s $2,310 million. In fiscal 2020, WestRock invested $978 million in capital expenditure and paid out $345 million in dividends.
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Models
Using Three models DCF Growth , P/E Multiple and Revenue Multiples.
In Bearish case the fair value of the company is 44.51$
In normal case 51.45$
In bullish case 53.44 $
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Reason to Buy
* The company has been witnessing solid trends in key end markets while focused on partnering with customers to fulfill their growing demand for sustainable, fiber-based packaging solutions.
*Financial position mentioned above
*In Brazil, it has been witnessing strong demand for containerboard and corrugated packaging. The company is well poised to capitalize on this growth in the region
*WestRock is poised well on strong demand for food, beverage, household cleaning and e-commerce. A solid balance sheet, investment in growth projects and KapStone acquisition will drive growth.
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RISK
• The pandemic has disrupted demand patterns across few of WestRock’s businesses. Demand in foodservice impacted by uncertainty in timing of reopening of restaurants, schools and other services
• WestRock expects higher natural gas and freight cost due to coming winter months. This will impact its margins in the first quarter fiscal 2021.
• The folding carton markets remain challenged by weak primary demand for processed, frozen, and dry foods. This is in line with the ongoing consumer preference for fresh foods .
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WRK Industry
Cash/Price 0.02 0.12
EV/EBITDA 7.62 8.03
PEG Ratio 2.79 3.65
Price/Book (P/B) 1.07 1.25
Price/Cash Flow (P/C 3.22 7.22
P/E (F1) 12.59 17.22
Price/Sales (P/S) 0.66 .58
Debt/Equity 0.86 .86
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No Technical tools used.
52 Week High-Low: $45.58 - $21.50
Beta: 1.36
Market Cap: $11.6 B
Dividend / Div Yld: $0.80 / 1.8%
...............................................
WestRock reports financial results in the following reportable segments:
1. Corrugated Packaging Segment (65% of total sales in fiscal 2020)
2. Consumer Packaging Segment (34.9% of total sales in fiscal 2020)
3. Land and Development Segment (0.1% of total sales in fiscal 2020)
.................................................
Financial Position
As of fiscal 2020 end, cash and cash equivalents were $251 million, significantly up from the $152 million witnessed at the end of fiscal 2019. Total debt was $9.4 billion at the end of fiscal 2020 compared with the $10.2 billion recorded at the end of fiscal 2019. Cash flow from operations was $2,071 million in fiscal 2020 compared with the prior fiscal’s $2,310 million. In fiscal 2020, WestRock invested $978 million in capital expenditure and paid out $345 million in dividends.
...............................................
Models
Using Three models DCF Growth , P/E Multiple and Revenue Multiples.
In Bearish case the fair value of the company is 44.51$
In normal case 51.45$
In bullish case 53.44 $
...............................................
Reason to Buy
* The company has been witnessing solid trends in key end markets while focused on partnering with customers to fulfill their growing demand for sustainable, fiber-based packaging solutions.
*Financial position mentioned above
*In Brazil, it has been witnessing strong demand for containerboard and corrugated packaging. The company is well poised to capitalize on this growth in the region
*WestRock is poised well on strong demand for food, beverage, household cleaning and e-commerce. A solid balance sheet, investment in growth projects and KapStone acquisition will drive growth.
...............................................
RISK
• The pandemic has disrupted demand patterns across few of WestRock’s businesses. Demand in foodservice impacted by uncertainty in timing of reopening of restaurants, schools and other services
• WestRock expects higher natural gas and freight cost due to coming winter months. This will impact its margins in the first quarter fiscal 2021.
• The folding carton markets remain challenged by weak primary demand for processed, frozen, and dry foods. This is in line with the ongoing consumer preference for fresh foods .
..............................................
WRK Industry
Cash/Price 0.02 0.12
EV/EBITDA 7.62 8.03
PEG Ratio 2.79 3.65
Price/Book (P/B) 1.07 1.25
Price/Cash Flow (P/C 3.22 7.22
P/E (F1) 12.59 17.22
Price/Sales (P/S) 0.66 .58
Debt/Equity 0.86 .86
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No Technical tools used.
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