Value
8.2/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 8.8 |
| P/S | 10.0 |
| EV/EBITDA | 7.7 |
| Fwd P/E | 9.5 |
| PEG | 10.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 8.7x
- ▸PEG: 0.32
- ▸Attractively valued
GPK · Why this verdict
Why Graphic Packaging Holding Compa (GPK) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.2/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
With only 2.6% headroom to the analyst price target, an unfavorable reward-to-risk ratio of 0.37, quality below the minimum threshold, and a dividend payout ratio of 401% that substantially exceeds reported earnings, the setup tilts firmly toward caution despite an otherwise reasonable earnings beat record.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Business quality falls below the minimum 4.0 floor, with no competitive moat identified, and free cash flow converting at only 68% of net income—a shortfall flagged as a quality warning, meaning a meaningful portion of reported earnings does not translate into spendable cash. Quality breakdown | Free cash flow as a percentage of net income should recover above 90% for 2 consecutive quarters, alongside a meaningful reduction in the quality gap, to demonstrate that earnings are backed by genuine cash generation. | →Stable |
| CounterA Piotroski F-score of 6.7 and a current ratio of 5.2 suggest the balance sheet is sound; if working capital efficiency improves, FCF conversion could strengthen without requiring structural operational change. | ||
A dividend payout ratio of 401% implies the company is distributing approximately four times its reported earnings to shareholders—a level that, combined with free cash flow converting at only 68% of net income, raises serious questions about whether the current distribution can be sustained. Catalyst breakdown | The dividend payout ratio should fall below 100% of net income for 2 consecutive quarters, signaling that earnings have recovered enough to cover the distribution. | →Stable |
| CounterFree cash flow may provide additional support even when GAAP earnings cannot; if balance sheet cash or other cash sources cover the gap in the near term, the payout may persist longer than the earnings payout ratio alone implies. | ||
Three beats in four quarters—including a strong 48% positive surprise in the most recent report—show the company can exceed expectations when conditions align, offering a potential sentiment catalyst if the beat pattern extends. Earnings | The company should post positive earnings surprises in at least 2 of the next 4 quarters, providing a tailwind to sentiment amid an otherwise cautious setup. | →Stable |
| CounterThe February quarter miss of 16.85% was severe enough to question whether the recent 48% beat represents a genuine operational shift or a low-baseline bounce from a weak prior period. | ||
With the stock just 2.6% below the analyst price target and a reward-to-risk ratio of 0.37—meaning potential downside is roughly 2.7 times the available upside—the current entry point offers little margin for error and the risk/reward geometry is unfavorable. Price targets | Over 12 months, the gap between the current price and the analyst target should expand beyond 15%, reflecting either a price pullback or a meaningful upward revision to targets, before the setup becomes attractive. | →Stable |
| CounterAnalyst targets are frequently revised upward; if the most recent 48% earnings beat prompts target upgrades, the upside gap could widen quickly, improving the reward/risk profile without a price decline. | ||
Business quality falls below the minimum 4.0 floor, with no competitive moat identified, and free cash flow converting at only 68% of net income—a shortfall flagged as a quality warning, meaning a meaningful portion of reported earnings does not translate into spendable cash.
→StableQuality breakdown
- Expectation
- Free cash flow as a percentage of net income should recover above 90% for 2 consecutive quarters, alongside a meaningful reduction in the quality gap, to demonstrate that earnings are backed by genuine cash generation.
CounterA Piotroski F-score of 6.7 and a current ratio of 5.2 suggest the balance sheet is sound; if working capital efficiency improves, FCF conversion could strengthen without requiring structural operational change.
A dividend payout ratio of 401% implies the company is distributing approximately four times its reported earnings to shareholders—a level that, combined with free cash flow converting at only 68% of net income, raises serious questions about whether the current distribution can be sustained.
→StableCatalyst breakdown
- Expectation
- The dividend payout ratio should fall below 100% of net income for 2 consecutive quarters, signaling that earnings have recovered enough to cover the distribution.
CounterFree cash flow may provide additional support even when GAAP earnings cannot; if balance sheet cash or other cash sources cover the gap in the near term, the payout may persist longer than the earnings payout ratio alone implies.
Three beats in four quarters—including a strong 48% positive surprise in the most recent report—show the company can exceed expectations when conditions align, offering a potential sentiment catalyst if the beat pattern extends.
→StableEarnings
- Expectation
- The company should post positive earnings surprises in at least 2 of the next 4 quarters, providing a tailwind to sentiment amid an otherwise cautious setup.
CounterThe February quarter miss of 16.85% was severe enough to question whether the recent 48% beat represents a genuine operational shift or a low-baseline bounce from a weak prior period.
With the stock just 2.6% below the analyst price target and a reward-to-risk ratio of 0.37—meaning potential downside is roughly 2.7 times the available upside—the current entry point offers little margin for error and the risk/reward geometry is unfavorable.
→StablePrice targets
- Expectation
- Over 12 months, the gap between the current price and the analyst target should expand beyond 15%, reflecting either a price pullback or a meaningful upward revision to targets, before the setup becomes attractive.
CounterAnalyst targets are frequently revised upward; if the most recent 48% earnings beat prompts target upgrades, the upside gap could widen quickly, improving the reward/risk profile without a price decline.
Per-dimension breakdown
Quality
3.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.9 |
| ROA | 2.5 |
| Gross margin | 0.0 |
| Op margin | 1.7 |
| Net margin | 1.6 |
| Current ratio | 5.2 |
| FCF quality | 5.2 |
| Moat | 3.8 |
| Piotroski F | 6.7 |
- ▸Earnings quality warning: 68% FCF/NI
- ▸No competitive moat
Growth
5.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 2.9 |
| EPS growth | 7.5 |
Momentum
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 3.1 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 2.1 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -11.1%/30d — confirmed downtrend
Sentiment
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 6.4 |
| erm sentiment | 3.9 |
Insider
5.3/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.5 |
| holder change | 5.1 |
- ▸Insider buying (low materiality) — $353,989 (0.012% of mkt cap)
Peer rank
5.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.6 |
| quality rank | 3.2 |
| growth rank | 3.1 |
- ▸Attractive P/E vs peers
Technical
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.3 |
| support resistance | 4.6 |
| 52w position | 0.0 |
| gap | 5.0 |
Risk (lower is worse)
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 1.9 |
| days to cover | 5.4 |
| volatility | 1.4 |
| put call | 0.0 |
| implied vol | 4.1 |
| max pain risk | 3.0 |
| beta | 9.0 |
| debt equity | 3.4 |
- ▸High short interest justified: 16%
- ▸Elevated put/call: 3.33
- ▸Above max pain $2
Catalyst
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 2.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 7.3 |
| dividend safety | 6.5 |
- ▸Strong earnings: 3B/1M
- ▸Dividend: 430.0%
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- MOMENTUM:5.1>=4.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:34d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.5=NEGATIVE
Warning (3)
- MOMENTUM:5.1<5.5 (soft — BUY_NOW allowed but watch)
- DEATH_CROSS:momentum=5.1>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.54
Upside
-4.8%
Downside
8.9%
Sizing output
AVOID
SetupRANGE_BOUND — RSI 51 mid-range, Bollinger mid-band
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — MCap $3.0B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Value at 8.2 could not lift the engine output above the verdict floor. Failed gate signal: ASYMMETRY:-0.5=NEGATIVE.
The strongest dimensions are Value at 8.2, Catalyst at 5.5, and Insider at 5.3; the weakest are Quality at 3.3, Risk (lower is worse) at 3.5, and Technical at 3.5. The V9 engine flagged 1 failed gate with 3 warnings, producing an asymmetric reward-to-risk of -0.54 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1With the stock just 2.6% below the analyst price target and a reward-to-risk ratio of 0.37—meaning potential downside is roughly 2.7 times the available upside—the current entry point offers little margin for error and the risk/reward geometry is unfavorable.
Trip ifUpside to the analyst price target expands beyond 15% for 2 consecutive months, driven by either a price pullback or a target upgrade.
- P2Business quality falls below the minimum 4.0 floor, with no competitive moat identified, and free cash flow converting at only 68% of net income—a shortfall flagged as a quality warning, meaning a meaningful portion of reported earnings does not translate into spendable cash.
Trip ifFree cash flow as a percentage of net income rises above 90% for 2 consecutive quarters.
- P3A dividend payout ratio of 401% implies the company is distributing approximately four times its reported earnings to shareholders—a level that, combined with free cash flow converting at only 68% of net income, raises serious questions about whether the current distribution can be sustained.
Trip ifDividend payout ratio falls below 100% of net income for 2 consecutive quarters.
- P4Three beats in four quarters—including a strong 48% positive surprise in the most recent report—show the company can exceed expectations when conditions align, offering a potential sentiment catalyst if the beat pattern extends.
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.