NEW YORK (TheStreet) -- Shares of MeadWestvaco Corp. (MWV) are up 4.41% to $42.37 after it was reported that activist investor Starboard Value LP reported a 5.6% stake in the company and said the packaging materials maker's stock was "deeply undervalued," according to Reuters.
Starboard, in a letter to the company, also said its management should take steps to improve operating margins and capital allocation and consider separating non-core assets.
The company has the highest ratio of selling, general and administrative expenses to sales in the industry due to excessive corporate expenses and higher-than-average operating costs, Starboard said in the letter, released today, Reuters said.
MeadWestvaco, which makes packaging materials for the healthcare, personal care, food and beverage, and agricultural industries, has a market value of about $7 billion.
TheStreet Ratings team rates MEADWESTVACO CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate MEADWESTVACO CORP (MWV) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, impressive record of earnings per share growth, compelling growth in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow."