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On Monday, Stifel analysts reiterated their Buy rating on shares of Greif Inc. (NYSE:GEF), maintaining a price target of $85.00. According to InvestingPro data, the stock appears slightly undervalued based on its Fair Value analysis, with analyst targets ranging from $65 to $93. The company’s performance matched internal projections, although the significant increase in Selling, General & Administrative expenses (SG&A), which created a $34 million impact for fiscal year 2025, was not fully anticipated by consensus estimates or Stifel’s own forecasts. This increase in SG&A was primarily expected in the first half of the year, as previously indicated by the company in the fourth quarter of fiscal year 2024.
Greif’s Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (AEBITDA) guidance was increased by $35 million, largely to reflect improved price and cost dynamics. The company, which generated $5.5 billion in revenue over the last twelve months with an EBITDA of $711.6 million, trades at a modest P/E ratio of 12.9x. Despite no substantial change in demand observed in the first quarter of fiscal year 2024, the potential for increased volumes could represent an additional $170 million annually, offering a further opportunity for growth.
Analysts expect AEBITDA to improve quarter-over-quarter, with a more significant enhancement anticipated in the third quarter of 2025. This improvement is attributed to seasonal factors, the full-year impact of the Ipackchem acquisition, and a more favorable price/cost spread. AEBITDA over a 12-month period could reach approximately $800 million, which would be a 14% increase compared to the $704 million reported in fiscal year 2024. InvestingPro analysis reveals that Greif maintains relatively low price volatility and has consistently paid dividends for 53 consecutive years. For detailed financial metrics and additional insights, access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Greif, Inc. reported its Q1 2025 earnings, revealing an adjusted earnings per share (EPS) of $0.39, which was below the forecasted $0.75. The company’s revenue reached $1.26 billion, slightly under the expected $1.27 billion. Despite these misses, Greif raised its low-end EBITDA guidance to $710 million and initiated a $100 million cost optimization program. Greif’s shareholders also approved all ten director nominees and ratified Deloitte & Touche LLP as the independent auditor for fiscal year 2025. Amendments to the company’s Management Equity Incentive and Compensation Plan were also passed by shareholders. Additionally, Greif announced its intention to sell its timber portfolio to reduce debt, reflecting strategic decisions to optimize its portfolio. Analyst discussions highlighted the company’s focus on polymer solutions and targeted end markets for growth. The company has been engaging in strategic actions, including plant closures, to align with its long-term growth objectives.
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