AMCOR PLC (AMCR): what the price requires

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/AMCR

Headline

Field	Value
Ticker	AMCR
Company	AMCOR PLC
Current price	$42.38/sh
Composition	Films and other flexible products 66% / Specialty flexible folding cartons 7% / Containers, preforms, and closures 28%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	whole-company
Operating margin needed	2.5%
Operating margin today	7.1%
Margin compression implied	-4.6pp
Implied growth	2.4%
Multiple paid	22x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~8.4pp (computed at the 7% minimum rate; the CAPM rate 6% sits below it).

Reconcile: at the x-ray's 9.3% required return this reads ~19.4%/yr; the models below use their own rates.

How unusual the bet is: within-range

Reference	Value
vs own history	-0.06σ
cohort percentile (of 225 peers)	51
implied end-window share	0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	3.49x	5	expensive
Earnings	2.50x	4	expensive
Relative	0.88x	3	justifies
Growth	0.65x	5	justifies

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.3%); the inversion above states its own rate.

Per-Model Detail (n=17)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$119.80	0.35x	yes	FCF base $1.5B, growth 25% (input: historical growth), terminal g 4.0%, WACC 9.3%, 7yr projection
DCF Exit Multiple	Growth	$65.17	0.65x	yes	Exit EV/EBITDA: 8.4x / 11.4x / 14.4x (bear / base = today's held flat / bull), 7yr
Relative Valuation	Relative	$41.57	1.02x	yes	P/E 20x (static sector reference · 2026-04), scenarios: 16.0x / 20.0x / 24.0x (bear / base = reference held flat / bull), EV/EBITDA 13x
Simple DDM	Growth	$79.80	0.53x	yes	DPS $2.59, g=5.8% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3%
Two-Stage DDM	Growth	$4.67	9.07x	yes	Stage 1: -42% for 5yr, Stage 2: 3.5% perpetual
Simple Excess Return	Asset	$15.80	2.68x	yes	BV/sh $25.12, ROE (TTM) 5.8%, ke 9.3%
Two-Stage Excess Return	Asset	$12.14	3.49x	yes	5yr excess ROE then converge to ke=9.3%
Discounted Future Market Cap	Growth	$61.49	0.69x	yes	Rev $22.2B, growth 30% (input: historical growth; tapered), Terminal P/S: 0.7x / 0.9x / 1.1x (bear / base = today's held flat / bull, cap 12x)
Growth-Adjusted P/E	Relative	—	—	no	—
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	$27.32	1.55x	yes	Normalized EBIT (5y avg op income, one-time charges added back) $1.47B × (1−21%) / WACC 9.3% → EPV (no growth)
Residual Income	Asset	$11.67	3.63x	yes	BV $25.12 + 5yr PV of (ROE (TTM) 5.8% − Kₑ 9.3%) × BV; BV grows 3.8%/yr
Graham Number	Asset	$28.63	1.48x	yes	√(22.5 × EPS $1.45 × BVPS $25.12) — Graham's conservative floor
EV/EBITDA Relative	Relative	$48.13	0.88x	yes	EBITDA $1.70B × sector EV/EBITDA 13.0x
FCF Yield	Earnings	$18.16	2.33x	yes	FCF $763.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF Yield	Earnings	$15.90	2.67x	yes	SBC-adj FCF $0.67B (FCF $0.76B − SBC $0.10B) capitalized at Kₑ
Ben Graham Formula	Earnings	$1.22	34.74x	yes	EPS $1.45 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median)
ROIC-Justified P/B	Asset	$8.60	4.93x	yes	BV $25.12 × (ROIC 3.2% / WACC 9.3%)
P/Sales Sector	Relative	$95.69	0.44x	yes	Revenue $22.19B × sector P/S 2.0x
PEG Fair Value	Relative	—	—	no	—
Earnings Yield	Earnings	$15.68	2.70x	yes	EPS $1.45 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	—	—	no	—
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Field	Value
Net debt	$13.6b
Net debt / NOPAT (after-tax)	11.00x
Net debt / operating income (pre-tax)	8.69x
Interest coverage	2.6x
Share count CAGR (dilution)	11.4%
Burning cash	no

Bullet Takeaways

• Amcor is one of the world's largest packaging companies, making the flexible films and rigid containers that wrap food, drinks, and household goods, and it just doubled its scale by merging with Berry Global.
• Capital allocation is the heart of the story: the company is using the merger to extract cost synergies, raised its fiscal 2026 synergy target to $270 million, and has now raised its dividend for seven straight years.
• The near-term drag is demand and cost: volumes were roughly flat, currency was a headwind, and the company trimmed its fiscal 2026 earnings and free-cash-flow outlook while building inventory to protect customer service.

Bull Case

Amcor's bull case is a capital-allocation story, and the centerpiece is the Berry Global merger. The combination roughly doubled the company's scale and is generating real, quantified cost savings rather than promised ones: the most recent quarter captured $77 million of synergies, and management raised the fiscal 2026 synergy target to $270 million, with a cumulative three-year target of $650 million expected to drive more than 35% earnings-per-share accretion by fiscal 2028. That is the disciplined version of a large acquisition, where the value comes from taking out duplicate cost across two overlapping manufacturing networks. The merger lifted adjusted EBITDA 87% year over year to $892 million in the quarter, so the scale benefit is already showing in the profit line.

The underlying business is a defensive cash machine that funds the capital return. Packaging demand is tied to consumer staples, food, beverages, and household products, which do not swing much with the economy, so the volumes are steady and the cash flow is predictable. Amcor frames its own model around exactly this, describing how it generates "strong cash flow and redeploy[s] cash to consistently create superior value for shareholders." The flexible-packaging business is, in the filing's words, "one of the world's largest suppliers of polymer resin, aluminum, and fiber based flexible packaging," which is scale that translates into purchasing power and manufacturing efficiency a smaller competitor cannot match.

The dividend record is the clearest evidence of the capital-allocation discipline. Amcor has raised its dividend for seven consecutive years and declared a quarterly payout of 65 cents a share, which at the current price is a meaningful yield backed by recurring cash flow. A seven-year streak of increases through a pandemic, an inflation spike, and a major merger is the kind of consistency that signals management treats the dividend as a commitment rather than a discretionary use of cash. The rigid-packaging segment shows the operating improvement underneath, with adjusted operating margin rising to 9.1% from 7.8% in fiscal 2025. A defensive business throwing off steady cash, a merger delivering quantified synergies, and a long dividend-growth record is the case for owning Amcor as a compounding income holding.

Bear Case

The sector cycle is where the bear case starts, because Amcor's growth is hostage to volumes it does not control, and right now those volumes are not growing. The most recent quarter showed roughly flat year-over-year volumes alongside an unfavorable currency impact, and the company cut its fiscal 2026 outlook in response, guiding adjusted earnings to $3.98 to $4.03 a share, down from a prior $4.00 to $4.15, and reducing its free-cash-flow forecast to $1.5 to $1.6 billion from $1.8 to $1.9 billion. The free-cash-flow cut came partly because the company is holding more inventory at higher cost to protect customer service, which is a sign that the operating environment is tougher than the synergy story alone suggests. Packaging is a low-growth, price-competitive business: when volumes are flat, the entire earnings story has to come from synergies and price, and both have limits.

The structural risk underneath the cycle is leverage, because the Berry merger was financed with substantial debt. Net debt sits near $13.6 billion, at roughly ten times operating income, and interest coverage is tight at about two times, meaning a meaningful share of operating profit goes straight to lenders. That is a heavy load for a low-growth business, and it constrains the very capital allocation the bull case celebrates: every dollar of synergy and free cash flow is contested between deleveraging, the dividend, and reinvestment. The reduced free-cash-flow guidance makes that tension sharper, because less cash means slower deleveraging or pressure on the payout, and a company that has raised its dividend for seven years will protect the streak, which can mean prioritizing the dividend over debt reduction at exactly the wrong time.

The valuation reflects a business priced for steady, modest performance rather than a bargain. The methods that value the demonstrated earnings power, an earnings-power read near $27 and a free-cash-flow capitalization near $18, sit below the price, so the static lenses say the stock is not cheap. The price is justified mainly by the relative-multiple and forward-growth methods, which credit the synergy-driven earnings recovery and a return to volume growth. The inversion shows the bar is not high, with an implied margin well below the current level, so the price is not demanding heroics. But the bet still requires the synergies to land on schedule, volumes to recover, and the heavy debt to come down, all in a low-growth packaging market exposed to consumer demand and input costs. The bear case is that flat volumes and a cut guidance are early signs that the synergy story is doing the heavy lifting while the underlying business stalls, and the leverage leaves little room if the recovery takes longer than planned.

Valuation

Amcor sits almost exactly where its blend of methods lands, but the blend hides a familiar split. At $41.11 (June 27, 2026), the static lenses that value the demonstrated business, earnings power near $27 and a free-cash-flow capitalization near $18, land below the price, while the forward-growth and relative-multiple methods land at or above it, with a sector earnings-multiple read essentially at the price and several growth-based methods well above. The price is therefore justified by the methods that credit the post-merger earnings recovery, not by the methods that value the business as it stood before the synergies. The recent merger distorts the trailing earnings with integration costs, which is why the operating-level numbers look thin and the adjusted figures look healthier; the price is paying for the adjusted, post-synergy business to emerge.

The embedded assumption, from the inversion, is undemanding on margin but contingent on execution. The price requires an operating margin well below the level the company currently earns, paired with low-single-digit growth, which is consistent with a defensive packaging business rather than a growth story. In plain terms, the price does not require Amcor to expand its margins; it requires the merger synergies to land and volumes to stabilize so the steady cash flow continues. That is a reasonable assumption for a consumer-staples-linked business, but it is an assumption about integration and demand, and the recently reduced guidance is a reminder that both can disappoint in the near term.

Solvency is the load-bearing consideration, because the merger left Amcor heavily indebted. Net debt near $13.6 billion sits at roughly ten times operating income, with interest coverage around two times, which is tight enough that debt service is a real claim on the cash flow. The company is generating strong free cash flow, guided to $1.5 to $1.6 billion even after the cut, and is shrinking its share count modestly, but the leverage means the dividend, the deleveraging, and reinvestment all draw on the same pool. The decisive question for the buyer is whether the synergy-driven cash flow comes through fast enough to bring the leverage down while sustaining the dividend, because the business is too low-growth to grow its way out of the debt and has to pay it down from the steady, defensive cash flow the bull case rests on.

Catalysts

Amcor's third quarter of fiscal 2026 reflected the first full stretch of the Berry Global combination. Net sales rose to $5.91 billion, beating expectations, and adjusted earnings per share were $0.96, up 6% year over year, while adjusted EBITDA jumped 87% to $892 million as the merger scale came through. The integration is the engine: the company captured $77 million of synergies in the quarter and raised its fiscal 2026 synergy target to $270 million, keeping the three-year cumulative target at $650 million and projecting more than 35% earnings accretion by fiscal 2028.

The cautionary signals came in the outlook and the volumes. Amcor trimmed its fiscal 2026 adjusted earnings guidance to $3.98 to $4.03 a share from $4.00 to $4.15, and cut its free-cash-flow forecast to $1.5 to $1.6 billion from $1.8 to $1.9 billion, citing flat volumes, a currency headwind, and a deliberate inventory build to protect customer service. The board declared a quarterly dividend of 65 cents, extending a seven-year streak of increases. The next prints turn on whether volumes return to growth and whether the synergies keep landing on schedule, since the earnings recovery the price assumes depends on both, and on whether the heavy post-merger debt begins to come down.

Peer Cohorts (Per Segment, With Filing Citations)

Global Flexible Packaging Solutions / Global Rigid Packaging Solutions (reported)

• CCK (CROWN HOLDINGS, INC.)
• (no filing in the citation store)
• GPK (Graphic Packaging Holding Co)
• (no filing in the citation store)
• PKG (PACKAGING CORP OF AMERICA)
• (no filing in the citation store)
• BALL (BALL CORPORATION)
• (no filing in the citation store)
• IP (INTERNATIONAL PAPER COMPANY)
• (no filing in the citation store)
• SLGN (SILGAN HOLDINGS INC)
• (no filing in the citation store)
• OI (O-I GLASS, INC.)
• (no filing in the citation store)

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q3 FY2026 earnings call · Q3 FY2026 earnings release