REYNOLDS CONSUMER PRODUCTS INC. (REYN): what the price requires

At today's price, REYNOLDS CONSUMER PRODUCTS INC. (REYN) is priced for +7.1% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

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

Headline

FieldValue
TickerREYN
CompanyREYNOLDS CONSUMER PRODUCTS INC.
Current price$26.34/sh
CompositionCooking products 34% / Waste products 25% / Tableware products 23% / Storage products 18% / Unallocated 0%

What The Price Requires (Inversion)

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

FieldValue
Inversion basiswhole-company
Operating margin needed6.1%
Operating margin today8.9%
Margin compression implied-2.8pp
Implied growth7.1%
Multiple paid22x 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 7.5% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.9pp.

Reconcile: at the x-ray's 9.3% required return this reads ~20.2%/yr; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history+0.69σ
cohort percentile (of 76 peers)66
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; 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.

FamilyMedian price/FVModelsReads
Asset1.31x4expensive
Earnings2.20x4expensive
Relative1.14x4expensive
Growth1.06x4expensive

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

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.4%); the inversion above states its own rate.

Per-Model Detail (n=16)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$26.700.99xyesFCF base $0.3B, growth 3% (input: historical growth), terminal g 2.9%, WACC 7.4%, 5yr projection
DCF Exit MultipleGrowth$25.491.03xyesExit EV/EBITDA: 50.5x / 52.5x / 54.5x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative$13.172.00xyesP/E 14x (static sector reference · 2026-04), scenarios: 11.8x / 14.0x / 16.2x (bear / base = reference held flat / bull), EV/EBITDA 17.6x
Simple DDMGrowth——no—
Two-Stage DDMGrowth$24.321.08xyesStage 1: 13% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$16.791.57xyesBV/sh $10.69, ROE (TTM) 14.5%, ke 9.3%
Two-Stage Excess ReturnAsset$20.811.27xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$18.761.40xyesRev $3.8B, growth 3% (input: historical growth; tapered), Terminal P/S: 1.2x / 1.5x / 1.7x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$20.251.30xyesEPS $1.56, growth 13% (input: historical EPS growth), PEG=1.31 (Fair)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings——no—
Residual IncomeAsset$21.421.23xyesBV $10.69 + 5yr PV of (ROE (TTM) 14.5% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$19.371.36xyes√(22.5 × EPS $1.56 × BVPS $10.69) — Graham's conservative floor
EV/EBITDA RelativeRelative$0.012634.00xyesEBITDA $0.14B × sector EV/EBITDA 8.0x (excluded from median)
FCF YieldEarnings$9.262.84xyesFCF $326.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$8.303.17xyesSBC-adj FCF $0.31B (FCF $0.33B − SBC $0.02B) capitalized at Kₑ
Ben Graham FormulaEarnings$45.060.58xyesEPS $1.56 × (8.5 + 2×13.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative$26.770.98xyesRevenue $3.78B × sector P/S 1.5x
PEG Fair ValueRelative$30.380.87xyesEPS $1.56 × (PEG 1.5 × growth 13.0% (input: historical EPS growth)) → PE 19.5x
Earnings YieldEarnings$16.861.56xyesEPS $1.56 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$1.5b
Net debt / NOPAT (after-tax)6.06x
Net debt / operating income (pre-tax)4.65x
Interest coverage3.7x
Share count CAGR (dilution)0.2%
Burning cashno

Bullet Takeaways

Reynolds is a mature, defensive consumer-staples maker behind Reynolds Wrap and Hefty, trading at $23.86 with the price supported by asset, relative-multiple, and growth-DCF value while only the earnings-power lens calls it expensive. The implied growth baked in is a modest 5 percent.

The near-term result was good: first-quarter 2026 revenue rose 7 percent to $877 million, EPS jumped 87 percent to $0.28, and gross margin expanded 60 basis points despite cost inflation.

The income story is the draw. Reynolds pays an annualized $0.92 dividend for a yield near 3.9 percent, backed by steady household-staple demand. The overhang is a roughly $200 million annualized commodity headwind from aluminum and resins, which management plans to offset through pricing and productivity.

Bull Case

Frame Reynolds by its stage, because that is how the numbers should be read. This is a mature consumer-staples company, not a grower, and mature staples are valued on cash generation, dividend coverage, and the durability of demand rather than on revenue acceleration. Reynolds sells products people buy regardless of the economy: aluminum foil, food storage bags, trash bags, disposable tableware. Branded products like Reynolds Wrap and Hefty accounted for 61 percent of products, with store brands the remaining 39 percent (FY2025 10-K, accession 0001628280-26-005284), and the branded names carry leading market positions and pricing power that the private-label competition cannot easily dislodge. The composition is diversified across cooking, waste, tableware, and storage, so no single category dictates the result.

The operating performance has been steadily improving. First-quarter 2026 revenue rose 7 percent year over year to $877 million, beating expectations, with net income up to $59 million and EPS of $0.28, an 87 percent increase. Gross margin expanded roughly 60 basis points on successful pricing and productivity, even against cost inflation, and retail revenues grew on 2 percent volume growth with category outperformance. A staples company growing volume and expanding margin in an inflationary environment is demonstrating exactly the pricing power the brands are supposed to confer. Particularly strong results came from Reynolds Cooking and Kitchen Essentials and Hefty Storage and Organization.

The valuation and the income support the price. The dividend is the anchor: $0.92 annualized for a yield near 3.9 percent, well covered by the guided $1.57 to $1.63 in full-year EPS. Management reaffirmed full-year 2026 guidance for net income of $331 to $343 million and adjusted EBITDA of $660 to $675 million. The bull case is a defensive, dividend-paying staples leader trading at a reasonable price, with self-help productivity offsetting input costs.

Bear Case

The external variable with the most leverage over Reynolds is commodity inflation, and the company is staring at a sizable headwind the price may not fully discount. Management has flagged roughly a $200 million annualized commodity and supply-chain headwind from aluminum and resins, with commodity costs rising $0.15 to $0.40 per pound and aluminum, polyethylene, and other resins each contributing roughly equally. Resin prices historically fluctuate with crude oil, natural gas, and refining capacity (FY2025 10-K, accession 0001628280-26-005284), none of which Reynolds controls. The plan is to offset the headwind with pricing and productivity, but pricing into a value-conscious consumer is a delicate exercise: push too hard and shoppers trade down to the store brands that already make up 39 percent of the product mix, including Reynolds' own private-label business that earns lower margins.

The second concern is leverage. Reynolds carries roughly $1.47 billion of net debt against trailing operating income near $317 million, putting net debt at about 4.6 times operating income with interest coverage around 3.7 times. That is a meaningful debt load for a low-growth staples business, and it limits flexibility: the cash that services debt and pays the 3.9 percent dividend competes with the productivity investments needed to offset commodity costs. In a higher-rate environment, refinancing that debt gets more expensive, and a company with thin growth has limited ability to grow its way out of leverage.

Third, the growth profile and the valuation leave little room for error. Management guides full-year net revenues flat to slightly lower versus 2025, so this is not a business that compounds; the bull case rests on margin and cost discipline, not top-line growth. The earnings-power-value method lands near $9.26 and the FCF-yield method near $9.26 as well, far below the $23.86 price (June 28, 2026), signaling that on the cash the business sustainably generates, the stock looks expensive. The blended X-ray central estimate sits near $20.81, below the price. Analysts carry a Hold consensus with price targets clustered around $23 to $27, and the stock has touched a 52-week low this year on margin-compression worries. The bear case is that a leveraged, no-growth staples company facing a $200 million cost headwind has limited upside and real downside if pricing power slips.

Valuation

Reynolds is valued as a mature consumer-staples cash generator, and at $23.86 the price is supported by asset-based, relative-multiple, and growth-DCF value while the earnings-power lens says expensive. The priced-in read characterizes it as a value-and-asset-supported name, not a growth bet, with implied growth of a modest 5.2 percent. For a low-growth staples business, the dividend-discount and cash-flow methods carry the most weight.

The methods cluster reasonably tightly around the price. On the supportive side, the DCF perpetual-growth lands near $27.84, the two-stage dividend-discount near $24.32, the DCF exit-multiple near $23.76, the two-stage excess-return near $20.81, and residual income near $21.42. On the cautious side, the earnings-power value and FCF-yield methods land near $9.26, reflecting that on sustainably-generated free cash flow the stock looks rich, and relative valuation lands near $13.17. The blended X-ray central estimate sits near $20.81, modestly below the price.

The honest framing is that Reynolds is roughly fairly valued: the methods that fit a dividend-paying staples company say it is reasonably priced, while the strict cash-flow methods say it is expensive, and the gap reflects the leverage and the commodity headwind weighing on free cash flow. The number to weigh is the dividend coverage against the $200 million cost pressure. If pricing and productivity offset the inflation and protect the $1.57 to $1.63 EPS, the dividend is safe and the stock is fairly valued to slightly cheap. If commodity costs overwhelm the offsets, the free-cash-flow methods near $9 set the warning, and the dividend coverage tightens.

Catalysts

First-quarter 2026 results, reported in early May, beat expectations. Net revenues rose 7 percent year over year to $877 million, ahead of the roughly $816 million consensus, with net income of $59 million and EPS of $0.28, up 87 percent. Adjusted EPS climbed to $0.28 from $0.23. Gross margin expanded about 60 basis points on pricing and productivity despite cost inflation, and retail revenues grew on 2 percent volume growth. Strength came from Reynolds Cooking and Kitchen Essentials and Hefty Storage and Organization, partly offset by softness in Hefty Waste and Clean-Up.

Management reaffirmed full-year 2026 guidance: net income of $331 to $343 million, adjusted EBITDA of $660 to $675 million, EPS of $1.57 to $1.63, and net revenues flat to slightly lower versus 2025. The board declared a quarterly dividend of $0.23, for an annualized $0.92 and a yield near 3.9 percent.

Near-term catalysts to watch: the trajectory of aluminum and resin costs against the roughly $200 million annualized commodity headwind, whether pricing and productivity fully offset it without losing volume to store brands, the company's ability to lean on its 27 domestic manufacturing plants to source aluminum domestically and sidestep tariffs, and the dividend coverage given the leverage. Analyst sentiment is a Hold consensus with price targets clustered around $23 to $27.

Peer Cohorts (Per Segment, With Filing Citations)

Reynolds Cooking & Baking (reported)

Hefty Waste & Storage / Presto Products (reported)

Hefty Tableware (reported)

Methodology Note

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.

View the full interactive REYN report on boothcheck