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Recent Buy: WestRock Company (WRK)

ID-100426334 Recent Buy: WestRock Company (WRK)I opened a new position with the purchase of  WestRock Company (WRK)

62 shares @ $38.56 on 2/15/2019.

This increases my forward 12-month dividend income by $112.84 to a total of $7,708.56. I also updated my portfolio page to reflect the change.

 

 

 

My Thoughts

This is a company that I have never heard of until about 3 weeks ago. These are the type of company that I love to own. They are borning but for the most part, are always profitable. The company is a leading provider of differentiated paper and packaging solutions. It’s also one of the largest paper and packaging companies with US$15 billion in annual revenue and 42,000 employees in 30 countries.

The company saw adjusted earnings of $4.09 for 2018. Analysts expect earnings of $4.35 for 2019 and $4.53 for 2020. However, CFRA expects earnings growth of 20% for the next three years.

So earnings growth are looking good for the next three years. Therefore, this should drive up the stock price as well as the dividend growth.

Speaking about dividends, Let’s see how WestRock has been delivering in this department.

WestRock has a dividend growth history of 10 years. The average dividend growth rate for the 10 years was 25.5%. The most recent dividend increase was 5.81%.

The current dividend payout ratio is 49%.

This looks like a company that I love to invest in with those numbers.

Now, is the company undervalued compared to its recent years?

First, the dividend yield currently sits at 4.66%. WestRock Company has a 5-year dividend yield average of 2.52%. So the dividend yield is almost double versus its 5-year average.

The PE has a 10-year average of 13.8, and a 5-year average of 16.8. Currently, the company has a PE ratio of 9.26 and a forward PE of 8.80.

We see that the current dividend and the current PE is better then it was in the past. So now let’s see how undervalued WestRock really is.

I find WRK to be undervalued, and I recommend it as a BUY at this time. I have a fair value price at $54.80. This means that WRK is 40.33% Undervalued based on today’s price of $39.05(2/18/2019).

Westrock-stock Recent Buy: WestRock Company (WRK)

Source: Fastgraphs.com

What do you think about the company? Plan on owning it or already do? or why not?

Thanks for reading, and don’t forget to connect with me through Facebook and Twitter to see my latest buys.

Image by Sira Anamwong at FreeDigitalPhotos.net

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Comments

  1. Another excellent recommendation. Like yourself, I had never heard of this company before you wrote about it here. I recently got FASTgraphs and I find it an excellent tool for finding and evaluating value dividend companies like this one. One thing that is worrisome about this company is that it is somewhat cyclical and it shows in the variations in its earnings (FY16 -35% and FY12 -19% while FY13 +63% and FY18+56%). I will definitely be doing some more looking into this stock! Thanks!

    • Hi Alan,

      I recently just became aware of the company and I immediately knew I had to own it. I love using FASTgraphs. I have been a member for the past 4 years. The time it has saved me on valuing company has paid for its self.

      yes WRK is a cyclical company but the price is so low that any down in future earnings is already priced in. Thank you for commenting and for reading my post have a great day!

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