WestRock Company (WRK) | Investment Case

1. Company Snapshot

1.a. Company Description

WestRock Company, together with its subsidiaries, provides fiber-based paper and packaging solutions in North America, South America, Europe, Asia, and Australia.It operates through two segments, Corrugated Packaging and Consumer Packaging.The Corrugated Packaging segment produces containerboards, corrugated sheets, corrugated packaging, and preprinted linerboards to consumer and industrial products manufacturers, and corrugated box manufacturers.

It also provides structural and graphic design, engineering services and custom, and proprietary and standard automated packaging machines, as well as turn-key installation, automation, line integration, and packaging solutions; distributes corrugated packaging materials and other specialty packaging products, including stretch films, void fills, carton sealing tapes, and other specialty tapes; operates recycling facilities that collect, sort, grade, and bale recovered paper; and provides lithographic laminated packaging products, as well as contract packing services.The Consumer Packaging segment manufactures and sells folding cartons that are used to package food, paper, beverages, dairy products, tobacco, confectionery, health and beauty, other household consumer, and commercial and industrial products; and express mail packages for the overnight courier industry.It also offers inserts and labels, as well as rigid packaging and other printed packaging products, such as transaction cards, brochures, product literature, marketing materials, and grower tags and plant stakes for the horticultural market; and secondary packages and paperboard packaging for over-the-counter and prescription drugs.

In addition, this segment manufactures and sells solid fiber and corrugated partitions, and die-cut paperboard components principally to glass container manufacturers and the automotive industry, as well as producers of beer, food, wine, spirits, cosmetics, and pharmaceuticals.WestRock Company is based in Atlanta, Georgia.

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1.b. Last Insights on WRK

Positive drivers for WestRock Company include the completion of the Smurfit-WestRock merger, which is expected to report financials from Q3 2024. The company's Q2 earnings showed a positive EBITDA performance, with the CEO optimistic about the paper industry cycle. Additionally, WestRock has signed a build-to-suit lease at LogistiCenter℠ at Pleasant Prairie, indicating expansion plans. The North America blister packaging market is also expected to grow at a CAGR of 7.1% from 2024 to 2030, with WestRock being a key player in this market.

1.c. Company Highlights

Last Price	51.51
Change Percentage	3.54%
Open	50.78
Previous Close	49.75
Market Cap ( Millions)	13304
Volume	11862013
Year High	54.83
Year Low	31.23
M A 50	51.38
M A 200	44.38

FCF Yield	5.15%
Dividend Yield	0.00%
ROE	-15.35%
Debt / Equity	85.15%
Net Debt / EBIDTA	302.50%
Price To Book	1.31
Price Earnings Ratio	-7.99
Price To FCF	19.4
Price To sales	0.66
EV / EBITDA	7.94

2. Transcript Summary

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3. NewsRoom

CTRL WRK Launches in the ServiceNow Store, Transforming Safety and Efficiency

Jun -02

Source: businesswire.com

Smurfit Westrock: Stock Price Weakness Represents A Clear Buy Opportunity

Mar -16

Source: seekingalpha.com

Smurfit WestRock Stock Is One of the S&P 500's Best Performers Today. Here's Why.

Oct -30

Source: investopedia.com

Like Him Or Hate Him, George Soros Is Betting Big On These 3 Stocks You Should Be Watching

Oct -07

Source: 247wallst.com

Smurfit WestRock Plc: Ready To Rock

Aug -01

Source: seekingalpha.com

Dermody Properties Breaks Ground on LogistiCenter℠ at Pleasant Prairie

Jun -27

Source: prnewswire.com

North America Blister Packaging Market Report 2024-2030, Featuring Constantia Flexibles, UFlex, WestRock, SteriPackGroup, Honeywell, Klockner Pentaplast, Sudpack, TekniPlex, Blisterpak and Nelipak

Jun -19

Source: globenewswire.com

WestRock's (WRK) Merger With Smurfit Kappa Gets Shareholders Nod

Jun -14

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.07%)

6. Segments

Corrugated Packaging

Expected Growth: 2.5%

WestRock's Corrugated Packaging segment growth of 2.5% is driven by increasing e-commerce demand, rising online shopping trends, and growing need for sustainable packaging solutions. Additionally, the company's strategic acquisitions, investments in innovation, and operational efficiencies also contribute to the segment's growth.

Consumer Packaging

Expected Growth: 1.8%

WestRock's Consumer Packaging segment growth of 1.8% is driven by increasing demand for e-commerce packaging, growth in specialty foods and beverages, and rising adoption of sustainable packaging solutions. Additionally, the company's focus on innovation, cost savings initiatives, and strategic acquisitions are contributing to the segment's growth.

Global Paper

Expected Growth: 1.2%

WestRock's Global Paper segment growth of 1.2% is driven by increasing demand for sustainable packaging, e-commerce growth, and rising need for paper-based solutions in the foodservice industry. Additionally, the company's strategic acquisitions and investments in innovation, such as its paperboard and containerboard products, contribute to its growth momentum.

Distribution

Expected Growth: 2.8%

WestRock Company's 2.8% growth is driven by increasing demand for sustainable packaging, expansion in e-commerce, and growing need for specialty paper products. Additionally, the company's strategic acquisitions, cost savings initiatives, and investments in operational efficiency have contributed to its growth momentum.

7. Detailed Products

Corrugated Containers

WestRock's corrugated containers are designed to protect and transport goods safely and efficiently.

Folding Cartons

WestRock's folding cartons are used for packaging of food, beverages, and pharmaceutical products.

Paperboard

WestRock's paperboard is a sustainable and recyclable material used for packaging and printing applications.

Kraft Paper

WestRock's kraft paper is a durable and sustainable packaging material used for various industrial and consumer applications.

Specialty Linings

WestRock's specialty linings are used for packaging of chemicals, paints, and other hazardous materials.

Dispensers and Closures

WestRock's dispensers and closures are used for packaging of personal care and beauty products.

Automated Packaging Systems

WestRock's automated packaging systems are designed to increase efficiency and reduce costs for packaging operations.

Sustainability Services

WestRock's sustainability services help companies reduce waste and increase recycling rates.

8. WestRock Company's Porter Forces

Forces Ranking

Threat Of Substitutes

WestRock Company faces moderate threat from substitutes due to the availability of alternative packaging materials and solutions.

Bargaining Power Of Customers

WestRock Company's customers have significant bargaining power due to their large size and ability to negotiate prices.

Bargaining Power Of Suppliers

WestRock Company has a diverse supplier base, reducing the bargaining power of individual suppliers.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the packaging industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The packaging industry is highly competitive, with several large players competing for market share, leading to a high intensity of rivalry.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	45.99%
Debt Cost	5.05%
Equity Weight	54.01%
Equity Cost	9.43%
WACC	7.41%
Leverage	85.15%

11. Quality Control: WestRock Company passed 1 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Sonoco

A-Score: 5.9/10

Value: 7.2

Growth: 5.0

Quality: 5.6

Yield: 8.0

Momentum: 1.5

Volatility: 8.3

1-Year Total Return ->

PCA

A-Score: 5.6/10

Value: 3.8

Growth: 4.7

Quality: 6.0

Yield: 6.0

Momentum: 4.5

Volatility: 8.7

1-Year Total Return ->

Greif

A-Score: 5.6/10

Value: 6.9

Growth: 4.2

Quality: 4.2

Yield: 7.0

Momentum: 4.0

Volatility: 7.0

1-Year Total Return ->

Reynolds Consumer Products

A-Score: 5.5/10

Value: 5.0

Growth: 5.0

Quality: 5.5

Yield: 7.0

Momentum: 1.5

Volatility: 9.0

1-Year Total Return ->

Graphic Packaging

A-Score: 5.3/10

Value: 8.0

Growth: 6.4

Quality: 4.2

Yield: 4.0

Momentum: 1.0

Volatility: 8.3

1-Year Total Return ->

WestRock

A-Score: 3.4/10

Value: 4.9

Growth: 2.7

Quality: 2.7

Yield: 2.0

Momentum: 5.0

Volatility: 3.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

11.88%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.41%

WestRock Company - US96145D1054

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on WRK

1.c. Company Highlights

Strong Momentum

Lower Growth

Higher Yield

Earnings Beats

Less Volatile

Lower Quality

Revenues Miss

Fairly Valued

Medium Volatility

Average Growth

Expensive

Stable Momentum

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.07%)

6. Segments

Corrugated Packaging

Expected Growth: 2.5%

Consumer Packaging

Expected Growth: 1.8%

Global Paper

Expected Growth: 1.2%

Distribution

Expected Growth: 2.8%

7. Detailed Products

Corrugated Containers

Folding Cartons

Paperboard

Kraft Paper

Specialty Linings

Dispensers and Closures

Automated Packaging Systems

Sustainability Services

8. WestRock Company's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: WestRock Company passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

51.51$

Current Price

51.51$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA