On September 19, 2023, Pactiv Evergreen Inc (NASDAQ:PTVE) saw a daily gain of 3.6%, contributing to a three-month gain of 16.75%. However, despite this upward trend, the company reported a Loss Per Share of $0.41. This leads to the question of whether Pactiv Evergreen’s stock is modestly undervalued. Let’s dive into a comprehensive analysis of its market value to find out.
Pactiv Evergreen Inc is a leading manufacturer and distributor of fresh foodservice and food merchandising products, as well as fresh beverage cartons. The company operates in three segments: Foodservice, Food Merchandising, and Beverage Merchandising. They produce a wide range of products including food containers, drinkware, tableware, and other related products.
Currently, Pactiv Evergreen’s stock price stands at $8.63, while its estimated intrinsic value is $11.39 according to the GF Value. This indicates that the stock might be modestly undervalued.
The GF Value is a unique valuation method that estimates a stock’s intrinsic value based on historical trading multiples, past performance, growth, and future business performance estimates. According to the GF Value estimation, Pactiv Evergreen’s stock appears to be modestly undervalued. This suggests that the long-term return of the stock is likely to be higher than its business growth.
However, it’s important to evaluate a company’s financial strength before making any investment decisions. Pactiv Evergreen has a cash-to-debt ratio of 0.07, ranking worse than 83.38% of companies in the Packaging & Containers industry. This indicates a relatively poor balance sheet.
In terms of profitability, Pactiv Evergreen has been profitable for 7 out of the past 10 years. However, its operating margin of 1.63% ranks worse than 75.94% of companies in the industry. The company’s average annual revenue growth is 5.6%, which ranks worse than 57.02% of its industry peers. Its 3-year average EBITDA growth is 3.4%, also ranking worse than 57.23% of companies in the industry.
To assess value creation, it’s important to compare a company’s return on invested capital (ROIC) to its weighted cost of capital (WACC). Pactiv Evergreen’s ROIC for the past 12 months was 3.88, while its WACC was 6.46.
Based on this analysis, Pactiv Evergreen’s stock appears to be modestly undervalued. However, it’s worth noting that the company’s financial strength and profitability are not strong. Further research and analysis are recommended before making any investment decisions.
Source: GuruFocus.
