Smurfit Westrock Plc (SW), headquartered in Dublin, Ireland, is a major player in planet-friendly packaging solutions across sectors such as food, healthcare, and retail. Operating in 40 countries, with 500-plus production sites, it focuses on recyclable, renewable materials and innovation. The company’s robust supply network enables it to deliver tailored paper-based packaging products and services worldwide. Smurfit has a market capitalization of $22.49 billion.
The company is set to report its third-quarter results for fiscal 2025 on Oct. 29 before the market opens. Ahead of the results, Wall Street analysts are optimistic about Smurfit’s bottom-line trajectory. For Q3, the company’s profit is expected to grow by 41.7% year-over-year (YOY) to $0.68 per diluted share.
However, Smurfit has not had a favorable track record of meeting Street expectations, as its bottom line missed consensus estimates in three of the four trailing quarters and exceeded them only once. For the current year, its profit is projected to grow by 8.2% annually to $2.25 per diluted share, followed by a 52% rise to $3.42 per diluted share in the next fiscal year.
Smurfit’s stock has exhibited volatility as the paper and related products industry faces challenges due to an inflation-induced drop in consumer spending and digitalization. However, the industry also benefits from tailwinds from e-commerce growth.
Over the past 52 weeks, Smurfit’s stock has dropped by 6.1%, while declining 20% year-to-date (YTD). In contrast, the S&P 500 Index ($SPX) has gained 16.9% and 15.5% over the same periods, respectively, which reflects that the stock is underperforming the broader market.
Smurfit’s business nature categorizes it as a consumer cyclical company. Comparing the stock to the Consumer Discretionary Select Sector SPDR Fund (XLY), we see that the stock has also underperformed its sector, as the ETF has gained 18.7% over the past 52 weeks and 5.9% YTD.
On July 30, Smurfit Westrock reported a mixed second-quarter result. As a result, the stock dropped 1.7% on the same day and a further 6.3% on July 31. The company’s net sales grew 167.4% YOY to $7.94 billion. But the company also incurred $280 million in costs associated with closures and restructuring efforts, which culminated in a quarterly net loss of $26 million, down significantly from the $132 million net income in the prior year’s period.
Wall Street analysts are still exceptionally bullish on Smurfit Westrock stock, awarding it a consensus “Strong Buy” rating, based on 16 analyst ratings. The ratings configuration is more bullish than it was a month ago, with 13 “Strong Buy” ratings now, up from 11. The ratings are completed by two “Moderate Buys” and one “Hold.”
The mean price target of $56.83 implies a 31.9% upside from current levels, while the Street-high price target of $63 implies a 46.3% upside.
