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Thoughts on Amcor (AMC)

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Question asked 27/06/2025

Thoughts on Amcor (AMC)

To the MM Team, I have been watching AMC for some time and cant work out why it cant find much love in the investing world. The ROE, eps growth, PE, PEG and dividend yield all look quite good. At its current price AMC seems to represent good value. The only negative I can see is the high gearing. I would appreciate the MM view on this cyclical defensive stock. Thanks, Charles

Answer

Hi Charles,

AMC has indeed struggled of late with its shares down over 7% in 2025, while the broader based index knocks on the door of its all time high. The stock has faced a few headwinds of late which has the market now judging the stock with a glass half empty attitude:

In FY24, AMC reported a 7% decrease in net sales, dropping to $13.64 billion from the previous year. Adjusted EBIT also saw a 1% decline year-over-year.
The company experienced reduced volumes due to soft consumer demand and customer inventory destocking, particularly in its rigid packaging segment.
In November 2024, AMC announced an $8.4 billion all-stock merger with Berry Global. The deal aims to create significant cost synergies, but Berry’s high debt levels and declining revenue, has weighed on AMC.

AMC’s net debt-to-EBITDA ratio stood at 3.1x at the end of fiscal 2024, above its target range of 2–3x. As you touched on this elevated leverage level is a concern as it limits the company’s financial flexibility. However, we feel the main reason AMC has lagged the index is lower packaging volumes across key segments, particularly in food, beverage, and personal care, core markets for Amcor.The stock trades on 11x relative to their usual 15x due to the above mention concerns, with UBS upgrading the stock on Friday to Buy ($18.15 PT), seeing very similar things to you Charles.

We think the stock is interesting value here, with the catalyst being the Berry Global merger starting to show synergistic gains.

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Amcor PLC (AMC)

LAST UPDATED 26/06/2025 14:38

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