Smurfit Westrock PLC: Strong P/S Ratings with Mixed Financials

A recent report highlights Smurfit Westrock PLC's stock scoring well under the Price/Sales Investor model while revealing weaknesses in EPS growth and total debt. Investors should consider mixed signals in fundamentals impacting stock performance.

Date: 16-11-2024

AI Rating: 5

Smurfit Westrock PLC (SW) has recently been evaluated under the Price/Sales Investor model, achieving a significant score of 50%. This model, based on Kenneth Fisher's strategy, assesses stocks primarily based on their low price/sales (P/S) ratios and long-term profitability metrics. Given the weight placed on profit growth and consistent margins, the stock's ability to meet some criteria is notable.

However, a deeper delve into the report reveals that while the stock passes the P/S ratio test, total debt/equity and long-term EPS growth rate tests are flagged as failures. The company also succeeded in demonstrating a robust free cash flow per share, alongside strong net profit margins for the past three years.

These mixed results indicate potential volatility in stock performance. Here’s a breakdown of the essential metrics:

Price/Sales Ratio: PASS
Total Debt/Equity Ratio: FAIL
Long-Term EPS Growth Rate: FAIL
Free Cash Per Share: PASS
Net Profit Margin: PASS

The failure to meet expectations in the EPS growth and total debt categories indicates potential risks for investors, as the likelihood of declining profitability or financial instability could weigh on the stock price. Conversely, the positive results in P/S ratios and cash flow suggest areas of resilience and opportunity. Investors might be advised to weigh these factors carefully, as the overall outlook appears neutral for the time being. Monitoring Smurfit Westrock's ability to address its growth metrics will be critical moving forward.

Stocks: SW