Graphic Packaging Holding scores 64 for management and 44 for moat. The management score rests on a return on invested capital of 6.5% and a gross margin of 18.7% — figures that describe a business earning a respectable return on what it employs. Debt sits at 1.76x equity. The moderate moat and strong management are not the same judgement, and the gap between them is where the argument about this business sits.
The price anchors are built on deliberately conservative assumptions. Growth is modelled at 5.6% a year, below the 6.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 11.2x. That produces an intrinsic value of $3.16, a 10-CAP price of $12.48 and a payback time price of $12.86, with the value zone set at the highest of the three, $12.86. Today's price of $8.96 sits inside that zone.
The price sits inside the value zone, but the business scores 44 for moat and 64 for management. Cheap and good are different tests, and only one of them is passed here.
| Price | $8.96 |
| Market cap | $2.7B |
| P/E ratio | 13.6x |
| Return on invested capital | 6.5% |
| Gross margin | 18.7% |
| Debt to equity | 1.76x |
| Free cash flow yield | -1.8% |
| Growth rate used | 5.6% |
| Growth rate measured | 6.0% |
| Exit multiple assumed | 11.2x |
| Company | Moat | Buy price |
| Silgan Holdings Inc. (SLGN) | 50 | $42.21 |
| Crown Holdings Inc (CCK) | 67 | $125.87 |
| Avery Dennison (AVY) | 43 | $145.27 |
| WestRock Company (WRK) | 8 | $19.57 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Graphic Packaging Holding rather than accepting ours.