Smurfit Kappa Group PLC
F:SK3
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Intrinsic Value
The intrinsic value of one SK3 stock under the Base Case scenario is 64.51 EUR. Compared to the current market price of 41.05 EUR, Smurfit Kappa Group PLC is Undervalued by 36%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
Valuation Backtest
Smurfit Kappa Group PLC
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Fundamental Analysis
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Smurfit Kappa Group PLC is a prominent player in the global packaging industry, primarily specializing in sustainable paper-based packaging solutions. Founded in 1934 and headquartered in Dublin, Ireland, the company has grown to become one of the largest manufacturers of corrugated packaging products in Europe and Latin America. With a commitment to innovation and environmental sustainability, Smurfit Kappa harnesses advanced technology and a robust supply chain to deliver high-quality packaging solutions tailored to a diverse range of industries, including food and beverage, consumer goods, and e-commerce. The company’s extensive network of production facilities and recycling capabilities...
Smurfit Kappa Group PLC is a prominent player in the global packaging industry, primarily specializing in sustainable paper-based packaging solutions. Founded in 1934 and headquartered in Dublin, Ireland, the company has grown to become one of the largest manufacturers of corrugated packaging products in Europe and Latin America. With a commitment to innovation and environmental sustainability, Smurfit Kappa harnesses advanced technology and a robust supply chain to deliver high-quality packaging solutions tailored to a diverse range of industries, including food and beverage, consumer goods, and e-commerce. The company’s extensive network of production facilities and recycling capabilities ensures that they can meet the demanding needs of customers while addressing the growing concern for sustainable practices in packaging.
For investors, Smurfit Kappa presents a compelling opportunity, driven by strong market fundamentals and a strategic emphasis on growth and sustainability. With increasing global demand for eco-friendly packaging solutions, the company is well-positioned to capitalize on this trend, evidenced by its consistent revenue growth and profitability. Moreover, Smurfit Kappa’s proactive approach to mergers and acquisitions has expanded its market reach and operational capabilities, enhancing shareholder value over time. As a forward-thinking organization, the company invests significantly in research and development to innovate and offer cutting-edge packaging solutions, ensuring its leading market position while addressing evolving consumer preferences toward sustainability. Overall, Smurfit Kappa represents a solid investment for those looking to capitalize on the intersection of sustainability and growth within the packaging sector.
Smurfit Kappa Group PLC is a leading provider of paper-based packaging solutions. The company operates primarily in two core business segments:
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Corrugated Packaging: This is the company's principal segment, encompassing the production and sale of corrugated containers and boxes. Smurfit Kappa supplies a wide range of industries, including food and beverage, electronics, cosmetics, and pharmaceuticals, providing innovative packaging solutions that enhance product protection, shelf appeal, and sustainability. This segment includes various products, such as trays, boxes, and display packaging solutions, and is supported by the company’s extensive network of plants and operations.
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Paper Manufacture: This segment involves the production of paper products that are used to create corrugated packaging. Smurfit Kappa operates several paper mills that produce a range of papers, including recycled paper, containerboard, and kraft papers. The company's commitment to sustainable practices is evident in its focus on recycling and using renewable materials to create its paper products, which supports its corrugated packaging operations.
These sectors are closely integrated, allowing Smurfit Kappa to maintain a competitive advantage through vertical integration, optimizing both the supply of raw materials and the efficiency of production. The company also emphasizes sustainability across its operations, aiming to reduce environmental impact and develop innovative, eco-friendly packaging solutions.
Smurfit Kappa Group PLC, a leading provider of paper-based packaging solutions, possesses several unique competitive advantages that set it apart from its rivals:
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Vertical Integration: Smurfit Kappa is heavily vertically integrated, managing the entire supply chain from raw material sourcing to production and distribution. This increases efficiency, reduces costs, and allows for better quality control.
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Sustainable Practices: The company has a strong commitment to sustainability, which resonates well with environmentally conscious consumers and businesses. Its focus on recycled materials and sustainable sourcing can provide a significant marketing advantage and compliance with regulatory trends.
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Innovative Product Development: Smurfit Kappa invests heavily in research and development, allowing it to create customized packaging solutions that meet specific customer needs. Their innovation in product design contributes to enhanced functionality and cost savings for clients.
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Strong Market Position: As one of the largest players in the corrugated packaging industry in Europe and Latin America, Smurfit Kappa benefits from economies of scale, stronger negotiation power with suppliers, and a widespread distribution network.
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Robust Customer Relationships: The company often engages in long-term contracts with major clients, leading to stable revenue streams and strong customer loyalty. Their integrated approach allows them to offer tailored solutions that strengthen these relationships.
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Geographic Diversification: With operations spread across multiple regions, Smurfit Kappa reduces reliance on any single market and can adapt to local market demands more effectively. This diversity also helps mitigate risks associated with economic downturns in specific areas.
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Financial Stability: A strong financial position allows Smurfit Kappa to invest in growth opportunities, including acquisitions and technological advancements, providing it with an edge over competitors that may lack such financial flexibility.
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Expertise in Supply Chain Management: The firm has a well-developed supply chain management system that enhances its operational efficiency, reduces lead times, and improves responsiveness to customer demand.
These competitive advantages contribute to Smurfit Kappa’s strong market position and ability to adapt to changing market conditions while driving value for its stakeholders.
Smurfit Kappa Group PLC, being a leading provider of paper-based packaging solutions, faces several risks and challenges in the near future. Here are some key areas to consider:
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Raw Material Costs: As a company heavily reliant on paper, fluctuations in the prices of raw materials—such as recycled paper and timber—can significantly impact profit margins. Global supply chain disruptions or changes in demand for these materials can exacerbate these issues.
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Sustainability Regulations: Increasing regulations around sustainability and environmental impact may require Smurfit Kappa to invest in more eco-friendly production processes or materials. While this can also present opportunities, the costs associated with compliance can be a challenge.
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Economic Conditions: Global economic fluctuations, including recessions or slowdowns in key markets, can lead to decreased demand for packaging products. Economic uncertainty can also affect customer spending, impacting orders and revenue.
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Competitive Pressure: The packaging industry is competitive, and Smurfit Kappa faces pressure from both established competitors and new entrants. To maintain market share, the company must continuously innovate and improve its offerings.
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Consumer Trends: Shifts in consumer preferences, such as increased demand for e-commerce packaging or sustainable products, require companies like Smurfit Kappa to adapt quickly. Failure to align with these trends can result in losing market relevance.
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Geopolitical Risks: Operating in various regions exposes Smurfit Kappa to geopolitical risks, including trade tariffs, political instability, or changes in trade agreements that could impact operations and costs.
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Supply Chain Disruptions: The ongoing effects of global pandemics or localized events (like natural disasters) can disrupt supply chains, affecting both the availability of raw materials and production schedules.
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Technological Advancements: The rise of digital technologies and automation may require continuous investment in improving operational efficiency. Failure to keep pace with technological advancements could disadvantage Smurfit Kappa compared to more agile competitors.
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Labor Market Challenges: Attracting and retaining skilled labor remains a challenge in many industries, including manufacturing and packaging. Rising wages and labor shortages could impact operational efficiency and profitability.
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Currency Fluctuations: Being an international player, Smurfit Kappa is exposed to currency risk. Fluctuations in exchange rates can affect the profitability of operations in different countries.
In summary, Smurfit Kappa Group PLC must navigate a complex landscape of competitive, economic, regulatory, and operational challenges to maintain its leadership position in the packaging industry. Proactively addressing these risks through strategic planning, innovation, and operational efficiency will be essential for future success.
Revenue & Expenses Breakdown
Smurfit Kappa Group PLC
Balance Sheet Decomposition
Smurfit Kappa Group PLC
Current Assets | 4.1B |
Cash & Short-Term Investments | 905m |
Receivables | 2.1B |
Other Current Assets | 1.1B |
Non-Current Assets | 8.5B |
Long-Term Investments | 29m |
PP&E | 5.6B |
Intangibles | 2.7B |
Other Non-Current Assets | 210m |
Current Liabilities | 2.7B |
Accounts Payable | 2.4B |
Other Current Liabilities | 316m |
Non-Current Liabilities | 4.4B |
Long-Term Debt | 3.6B |
Other Non-Current Liabilities | 804m |
Earnings Waterfall
Smurfit Kappa Group PLC
Revenue
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11.3B
EUR
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Cost of Revenue
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-7.5B
EUR
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Gross Profit
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3.8B
EUR
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Operating Expenses
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-2.4B
EUR
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Operating Income
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1.4B
EUR
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Other Expenses
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-652m
EUR
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Net Income
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758m
EUR
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Free Cash Flow Analysis
Smurfit Kappa Group PLC
EUR | |
Free Cash Flow | EUR |
Smurfit Kappa outperformed its peer group in challenging market conditions, showing resilience with its innovative and sustainable packaging solutions. The Return on Capital Employed (ROCE) stood at 19%, reflecting a solid financial performance, while EBITDA reached $1.13 billion, showcasing a slight decline yet an improved margin from 18.4% to 19.1%. Notably, Smurfit Kappa is on track to meet its 2030 sustainability goals, having reduced emissions intensity by 44% since 2005. Even as group revenue dipped by 9% to $5.8 billion, due to reduced box volumes and European earnings, the Americas saw higher earnings year-on-year. With a capital allocation framework aimed at investments and a disciplined approach to acquisitions, the company is confident about future prospects, underlined by a 6% increase in the interim dividend to €0.335 per share.
What is Earnings Call?
SK3 Profitability Score
Profitability Due Diligence
Smurfit Kappa Group PLC's profitability score is 52/100. The higher the profitability score, the more profitable the company is.
Score
Smurfit Kappa Group PLC's profitability score is 52/100. The higher the profitability score, the more profitable the company is.
SK3 Solvency Score
Solvency Due Diligence
Smurfit Kappa Group PLC's solvency score is 49/100. The higher the solvency score, the more solvent the company is.
Score
Smurfit Kappa Group PLC's solvency score is 49/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
SK3 Price Targets Summary
Smurfit Kappa Group PLC
Shareholder Yield
Current shareholder yield for SK3 is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
SK3 Price
Smurfit Kappa Group PLC
Average Annual Return | 10.96% |
Standard Deviation of Annual Returns | 25.63% |
Max Drawdown | -44% |
Market Capitalization | 10.7B EUR |
Shares Outstanding | 261 095 008 |
Percentage of Shares Shorted |
N/A
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Profile
Country
Industry
Market Cap
Dividend Yield
Description
Smurfit Kappa Group Plc engages in the manufacture, distribution, and sale of containerboard, corrugated containers, and other paper-based packaging products, such as solid board, graphic board, and bag-in-box. The company is headquartered in Dublin, Dublin and currently employs 48,000 full-time employees. The company went IPO on 2007-03-14. The firm manufactures, distributes and sells containerboard, corrugated containers and other paper-based packaging products. The company operates through two segments: Europe and the Americas. The Europe segment includes a system of mills and plants that produces a line of containerboard that is converted into corrugates containers. In addition, to other types of paper-based packaging and bag-in-box operations. The Americas segment, which includes forestry and other types of paper, such as boxboard, sack paper and graphic paper, and paper-based packaging, such as folding cartons and paper sacks.
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The intrinsic value of one SK3 stock under the Base Case scenario is 64.51 EUR.
Compared to the current market price of 41.05 EUR, Smurfit Kappa Group PLC is Undervalued by 36%.