danialalkhateeb19

Long term stock

Long
NYSE:WRK   Westrock Company
Stock price $43.35 (As of 12/31/20) Price Target (6-12 Months): $51.00 Recommendation: Outperform
52 Week High-Low: $45.58 - $21.50
Beta: 1.36
Market Cap: $11.6 B
Dividend / Div Yld: $0.80 / 1.8%
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WestRock reports financial results in the following reportable segments:
1. Corrugated Packaging Segment (65% of total sales in fiscal 2020)
2. Consumer Packaging Segment (34.9% of total sales in fiscal 2020)
3. Land and Development Segment (0.1% of total sales in fiscal 2020)
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Financial Position
As of fiscal 2020 end, cash and cash equivalents were $251 million, significantly up from the $152 million witnessed at the end of fiscal 2019. Total debt was $9.4 billion at the end of fiscal 2020 compared with the $10.2 billion recorded at the end of fiscal 2019. Cash flow from operations was $2,071 million in fiscal 2020 compared with the prior fiscal’s $2,310 million. In fiscal 2020, WestRock invested $978 million in capital expenditure and paid out $345 million in dividends.
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Models
Using Three models DCF Growth , P/E Multiple and Revenue Multiples.
In Bearish case the fair value of the company is 44.51$
In normal case 51.45$
In bullish case 53.44 $
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Reason to Buy
* The company has been witnessing solid trends in key end markets while focused on partnering with customers to fulfill their growing demand for sustainable, fiber-based packaging solutions.
*Financial position mentioned above
*In Brazil, it has been witnessing strong demand for containerboard and corrugated packaging. The company is well poised to capitalize on this growth in the region
*WestRock is poised well on strong demand for food, beverage, household cleaning and e-commerce. A solid balance sheet , investment in growth projects and KapStone acquisition will drive growth.
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RISK
• The pandemic has disrupted demand patterns across few of WestRock’s businesses. Demand in foodservice impacted by uncertainty in timing of reopening of restaurants, schools and other services
WestRock expects higher natural gas and freight cost due to coming winter months. This will impact its margins in the first quarter fiscal 2021.
• The folding carton markets remain challenged by weak primary demand for processed, frozen, and dry foods . This is in line with the ongoing consumer preference for fresh foods .
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WRK Industry
Cash/Price 0.02 0.12
EV/EBITDA 7.62 8.03
PEG Ratio 2.79 3.65
Price/Book (P/B) 1.07 1.25
Price/Cash Flow (P/C 3.22 7.22
P/E (F1) 12.59 17.22
Price/Sales (P/S) 0.66 .58
Debt/Equity 0.86 .86
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No Technical tools used.

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