Smurfit Westrock plc (SW): what the price requires
At today's price, Smurfit Westrock plc (SW) is priced for +11.8% 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/SW
Headline
| Field | Value |
|---|---|
| Ticker | SW |
| Company | Smurfit Westrock plc |
| Sector / Industry | Basic Materials |
| Current price | $43.01/sh |
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 | 1.6% |
| Operating margin today | 5.1% |
| Margin compression implied | -3.5pp |
| Implied growth | 11.8% |
| Multiple paid | 24x operating income |
The operating-margin requirement is derived from the framework's value band at year 5, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 7.8% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~8pp.
Reconcile: at the x-ray's 9.3% required return this reads ~23%/yr; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| cohort percentile (of 76 peers) | 76 |
| sustained it ~5 years at this level | 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 | 9.75x | 5 | expensive |
| Earnings | 2.41x | 5 | expensive |
| Relative | 1.00x | 5 | justifies |
| Growth | 0.69x | 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 9.5%); the inversion above states its own rate.
Per-Model Detail (n=20)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $78.24 | 0.55x | yes | FCF base $1.2B, growth 25% (input: historical growth), terminal g 4.0%, WACC 9.5%, 7yr projection |
| DCF Exit Multiple | Growth | $57.66 | 0.75x | yes | Exit EV/EBITDA: 4.0x / 5.6x / 8.6x (bear / base = today's held flat / bull), 7yr |
| Relative Valuation | Relative | $42.87 | 1.00x | yes | P/E 27.66x (blended: static sector reference 14x + trailing (TTM) 60x), scenarios: 22.1x / 27.7x / 33.2x (bear / base = reference held flat / bull), EV/EBITDA 8x |
| Simple DDM | Growth | $25.75 | 1.67x | yes | DPS $1.80, g=2.1% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3% |
| Two-Stage DDM | Growth | $63.91 | 0.67x | yes | Stage 1: 20% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $7.81 | 5.51x | yes | BV/sh $34.33, ROE (TTM) 2.1%, ke 9.3% |
| Two-Stage Excess Return | Asset | $4.41 | 9.75x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $62.41 | 0.69x | yes | Rev $31.2B, growth 30% (input: historical growth; tapered), Terminal P/S: 0.6x / 0.7x / 0.9x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $25.20 | 1.71x | yes | EPS $0.72, growth 35% (input: historical EPS growth), PEG=1.70 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $3.22 | 13.36x | yes | Normalized EBIT (latest-period EBIT; under 3y history) $0.25B × (1−25%) / WACC 9.5% → EPV (no growth) |
| Residual Income | Asset | $3.21 | 13.40x | yes | BV $34.33 + 5yr PV of (ROE (TTM) 2.1% − Kₑ 9.3%) × BV; BV grows 1.4%/yr |
| Graham Number | Asset | $23.58 | 1.82x | yes | √(22.5 × EPS $0.72 × BVPS $34.33) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $61.68 | 0.70x | yes | EBITDA $4.09B × sector EV/EBITDA 8.0x |
| FCF Yield | Earnings | $20.42 | 2.11x | yes | FCF $1022.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $17.87 | 2.41x | yes | SBC-adj FCF $0.90B (FCF $1.02B − SBC $0.12B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $23.23 | 1.85x | yes | EPS $0.72 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $3.74 | 11.50x | yes | BV $34.33 × (ROIC 1.0% / WACC 9.5%) |
| P/Sales Sector | Relative | $89.07 | 0.48x | yes | Revenue $31.23B × sector P/S 1.5x |
| PEG Fair Value | Relative | $27.00 | 1.59x | yes | EPS $0.72 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $7.78 | 5.53x | yes | EPS $0.72 / 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 | $15.1b |
| Net debt / NOPAT (after-tax) | 12.73x |
| Net debt / operating income (pre-tax) | 9.55x |
| Interest coverage | 2.0x |
| Share count CAGR (dilution) | 1.6% |
| Burning cash | no |
Bullet Takeaways
- Smurfit Westrock is the merger integration trade in packaging: the company states in its 10-K that "we targeted annual pre-tax run-rate synergies of $400 million by the end of 2025, which we achieved, owing to integration benefits, procurement leverage and administrative and overhead rationalization" (accession 0001628280-26-012555), and management says capture is running ahead of plan.
- The risk is the balance sheet meeting the cycle: $15.1 billion of net debt sits at more than 10 times trailing operating income with interest coverage of 1.7 times, and first-quarter net income fell to $65 million from $384 million a year earlier on economic downtime, weather, and closure charges.
- Watch the capacity actions land: over 500,000 tons of containerboard and coated recycled board capacity coming out via the St. Paul and Forney closures, plus German converting consultations and a La Tuque machine shutdown, all aimed at restoring price over volume.
Bull Case
Paper and packaging is a sector where the accounting almost never shows you the business. Earnings swing with containerboard prices, downtime, and integration charges, so a trailing profit figure can make the same mill system look brilliant one year and broken the next. Smurfit Westrock is the extreme case: a company built by combination in 2024, still digesting, with trailing GAAP earnings of $0.72 per share that carry accelerated depreciation, closure costs, and a quarter hit by $65 million of severe-weather expense. The bull case starts by refusing to read that as the earning power of a $31.2 billion revenue system spanning, in the filing's words, "North America, South America, Europe, Asia, Africa, and Australia" (accession 0001628280-26-012555).
What the noise conceals is an integration running ahead of schedule. The 10-K states plainly that the company "targeted annual pre-tax run-rate synergies of $400 million by the end of 2025, which we achieved, owing to integration benefits, procurement leverage and administrative and overhead rationalization" (accession 0001628280-26-012555), and management said on the first-quarter call that synergy capture continues to run ahead of internal expectations. The demand backdrop the filing describes is secular, not just cyclical: "shifting consumer behaviors have accelerated, particularly with the rise of e-commerce and increased awareness of unsustainable" packaging alternatives (same accession), the trend that moves volume from plastic toward fiber. Commercially the machine is winning work through the turbulence, signing contracts with more than 600 new corrugated customers in the first quarter with momentum continuing into April.
Management is also doing the unglamorous supply-side work that packaging bulls should want: permanently closing the St. Paul coated recycled board mill, discontinuing the Forney containerboard mill, shutting a La Tuque paper machine, and opening consultations on two German converting plants, together removing well over 500,000 tons of capacity. Closing your own high-cost capacity is how a scale producer converts industry discipline into price. If the synergy run-rate keeps building while the closures tighten supply, the depressed trailing margin of 4.5% is the starting point, not the destination, and the forward-looking cash-flow methods that land comfortably above today's $44.22 are describing exactly that recovery.
Bear Case
The moat here was supposed to be scale, and the evidence is accumulating that scale no longer defends price. A combined system this large was meant to give Smurfit Westrock pricing discipline in containerboard; instead the company spent the first quarter taking economic downtime, absorbing $70 million of accelerated depreciation on machines it is killing, and announcing the removal of over 500,000 tons of its own capacity. You do not close mills in Minnesota, Texas, Quebec, and potentially Germany because demand is firm. The company's own filing concedes the market's verdict, noting that "the trading price of our ordinary shares has from time to time been adversely affected in part due to the impact of macroeconomic conditions on pricing and demand" (accession 0001628280-26-012555).
The customer side of the moat is eroding too. The 10-K acknowledges that customers "have become larger" and warns that "such consolidation could have a material adverse impact on our business, results of operations, cash flows and financial condition" (accession 0001628280-26-012555). Consolidated buyers negotiate harder against packaging suppliers than fragmented ones, which is precisely the wrong dynamic for a company that needs price recovery to earn its multiple. The first quarter showed what happens when volume softness meets a fixed-cost mill system: sales up less than 1% to $7.71 billion, net income down from $384 million to $65 million, adjusted EBITDA down from $1,252 million to $1,076 million.
The price does not leave room for this to be a long slog. At about 25 times operating income, today's quote implies operating profit compounding near 14% a year for five years; historically, fewer than half of comparable fast-growers sustained that pace for the duration. And the balance sheet raises the stakes: $15.1 billion of net debt runs more than 10 times trailing operating income on a pre-tax basis, with interest coverage of 1.7 times, the same debt the 10-K flags as a standing risk to the business (accession 0001628280-26-012555). If containerboard pricing stays soft while energy and freight costs climb, as management itself warned they may, the deleveraging math extends and the growth assumption embedded in the price quietly expires.
Valuation
At $44.22 the market is paying about 25 times operating income for a packaging system currently earning a 4.5% operating margin, which works out to an embedded bet of roughly 14% annual operating-profit growth for five years. That rate sits in the upper half of the peer multiple range, and only about 47% of comparable fast-growers historically held such a pace for five years. The methods split exactly the way a depressed-earnings recovery story should. Asset and earnings-power approaches, which read today's 2.1% return on equity and trailing profits at face value, land far below the price, at roughly a tenth and two-fifths of it respectively. Peer multiples land essentially at the price. The forward cash-flow methods land well above it, but they get there by projecting the recovery: the perpetual-growth variant builds from a $1.2 billion free-cash-flow base with high assumed growth, and the exit-multiple variant holds today's 5.8 times EV/EBITDA flat over seven years. The price, in other words, is a wager that trailing earnings are an artifact of integration and downtime rather than the system's true yield.
The filing supports parts of that wager with hard inputs: the $400 million synergy run-rate the company states it achieved by the end of 2025 (accession 0001628280-26-012555) is real, banked cost-out that flows into future operating income, and the revenue base of $31.2 billion gives small margin moves large dollar consequences. The constraint is the capital structure carrying the wait. Net debt of $15.1 billion stands at more than 10 times trailing operating income of $1.4 billion on the EDGAR quarterly basis (the price analysis reads a modestly higher figure on its own measurement basis), interest coverage is 1.7 times, and liquid assets of $674 million are thin against a $15.8 billion gross debt stack. The company is not burning cash, and the share count has been roughly stable outside merger issuance, but every quarter of soft pricing extends the time the leverage has to be serviced out of a 4.5% margin. The decisive variable is simple: whether the 500,000-plus tons of announced capacity closures move price before the debt costs move first.
Catalysts
The capacity actions announced this spring are the events to track. Smurfit Westrock is permanently closing its St. Paul, Minnesota coated recycled board mill and discontinuing production at the Forney, Texas containerboard mill, removing over 500,000 tons of capacity, alongside the permanent shutdown of a 127,000-ton paper machine at La Tuque, Quebec and consultations on closing two German converting facilities. Each closure trades near-term charges (the first quarter absorbed $70 million of accelerated depreciation) for a tighter supply position; the next two quarterly prints will show whether containerboard pricing responds.
The first quarter, reported at the end of April, set the bar low: net sales of $7.71 billion slightly missed consensus, net income fell to $65 million from $384 million, and adjusted EBITDA declined to $1,076 million from $1,252 million, with $65 million of severe-weather costs and economic downtime doing much of the damage. Management flagged a continued challenging cost environment in energy and freight, but pointed to synergy capture running ahead of expectations and more than 600 new corrugated customer contracts signed in the quarter with momentum into April. Separately, the company has examined simplifying its listing structure, including a potential delisting from the London Stock Exchange; any decision there would consolidate trading liquidity around the NYSE line. The second-quarter report is the next scheduled information event, with weather effects out of the comparison and the first clean read on closure-driven pricing.
Peer Cohorts (Per Segment, With Filing Citations)
Europe, MEA and APAC (reported)
- IP (INTERNATIONAL PAPER COMPANY)
- (no filing in the citation store)
- PKG (PACKAGING CORP OF AMERICA)
- (no filing in the citation store)
- GPK (Graphic Packaging Holding Co)
- (no filing in the citation store)
- SLVM (SYLVAMO CORPORATION)
- (no filing in the citation store)
- AMCR (AMCOR PLC)
- (no filing in the citation store)
- AVY (AVERY DENNISON CORPORATION)
- (no filing in the citation store)
- KMB (KIMBERLY-CLARK CORPORATION)
- (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
company announcements, April-June 2026 · Q1 2026 10-Q, May 2026 · Q1 2026 earnings call, April 2026 · Q1 2026 10-Q and company announcements, April-June 2026 · Packaging Dive, April 2026