Valued at a market cap of $27.9 billion, Smurfit Westrock Plc (SW) manufactures, distributes, and sells containerboard, corrugated containers, and other paper-based packaging products. The Dublin, Ireland-based company is one of the largest integrated producers of containerboard, high-graphics preprinted linerboard, and paper recyclers in North America.
Companies worth $10 billion or more are generally described as “large-cap” stocks, and SW fits right into that category with its market cap exceeding this threshold. The company is a global leader in sustainable paper and packaging and operates in over 40 countries with over 500 packaging converting operations and 62 paper mills.
Smurfit Westrock is currently trading 5.9% below its 52-week high of $56.99, reached on Nov. 22. Shares of this packaging company have declined 2.5% over the past month, underperforming the broader Consumer Discretionary Select Sector SPDR Fund (XLY) 1.7% returns during the same time frame.
Moreover, over the past three months, SW has soared 8.5%, lagging behind XLY’s 12.8% returns.
To confirm its recent bearish trend, SW has been trading below its 10-day moving average since mid-December. However, it has remained above its 50-day moving average since late October.
On Oct. 30, shares of SW surged 12% following its Q3 earnings release. The company’s net sales increased by a whopping 163.2% year-over-year to $7.67 billion. Positive impacts of acquisitions and growth in corrugated volumes contributed to the top-line growth. However, its net income decreased by $379 million, to a net loss of $150 million primarily due to higher COGS, selling, general and administrative (SG&A) expenses, and significant transaction and integration-related expenses.
Significant revenue growth and a 141% annual increase in adjusted EBITDA to $1.3 billion might have overshadowed the decline in the bottom-line figure and led to its upward price movement.
SW has outpaced its rival, Ball Corporation (BALL), which declined 11.5% over the past month and 19% over the past three months.
Despite Smurfit Westrock’s recent underperformance, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 13 analysts covering it, and the mean price target of $61.38 suggests a modest 14.5% premium to its current levels.
