Earnings Growth
Earnings growth is arguably the most important factor, as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors. For growth investors, double-digit earnings growth is highly preferable, as it is often perceived as an indication of strong prospects (and stock price gains) for the company under consideration.
While the historical EPS growth rate for Graphic Packaging is 25.7%, investors should actually focus on the projected growth. The company's EPS is expected to grow 29.8% this year, crushing the industry average, which calls for EPS growth of -5%.
Cash Flow Growth
Cash is the lifeblood of any business, but higher-than-average cash flow growth is more beneficial and important for growth-oriented companies than for mature companies. That's because high cash accumulation enables these companies to undertake new projects without raising expensive outside funds.
Right now, year-over-year cash flow growth for Graphic Packaging is 53%, which is higher than many of its peers. In fact, the rate compares to the industry average of 13.9%.
While investors should actually consider the current cash flow growth, it's worth taking a look at the historical rate too for putting the current reading into proper perspective. The company's annualized cash flow growth rate has been 19.3% over the past 3-5 years versus the industry average of 13.9%
Promising Earnings Estimate Revisions
The superiority of a stock in terms of the metrics outlined above can be further validated by looking at the trend in earnings estimate revisions. A positive trend is of course favorable here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
The current-year earnings estimates for Graphic Packaging have been revised upward. The Estimate for the current year has surged 3.5% over the past month.
Bottom Line
This combination indicates that Graphic Packaging is a potential outperformer and a solid choice for growth investors.
[link] [comments] https://www.reddit.com/r/stocks/comments/13z30ly/is_graphic_packaging_gpk_a_solid_growth_stock_3/
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