NEW YORK (TheStreet) -- Shares of Graphic Packaging Holding Co. (GPK - Get Report) are up 1.49% to $11.27 on Tuesday following the company's decision to sell its bags and kraft paper business to Mondi Group for $105 million in cash.
Mondi is a South African paper and packaging company looking to expand its presence in the U.S., Reuters reported.
The company said the transaction is expected to close in the early part of the 2014 third quarter.
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TheStreet Ratings team rates GRAPHIC PACKAGING HOLDING CO as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate GRAPHIC PACKAGING HOLDING CO (GPK) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, reasonable valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 38.67% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, GPK should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- GRAPHIC PACKAGING HOLDING CO has improved earnings per share by 10.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, GRAPHIC PACKAGING HOLDING CO increased its bottom line by earning $0.42 versus $0.31 in the prior year. This year, the market expects an improvement in earnings ($0.65 versus $0.42).
- The net income growth from the same quarter one year ago has significantly exceeded that of the Containers & Packaging industry average, but is less than that of the S&P 500. The net income increased by 0.8% when compared to the same quarter one year prior, going from $34.90 million to $35.20 million.
- Net operating cash flow has significantly increased by 351.26% to $29.90 million when compared to the same quarter last year. In addition, GRAPHIC PACKAGING HOLDING CO has also vastly surpassed the industry average cash flow growth rate of -64.53%.
- You can view the full analysis from the report here: GPK Ratings Report