Analyst Note| Charles Gross |
WestRock produced a decent fiscal fourth quarter, but lower prices weighed on the corrugated and consumer segments' results. Corrugated volumes were slightly better than expected in the second half, thanks to the rebound in industrial production from second-quarter lows. However, consolidated results remain below 2019 levels. Quarterly sales declined by about 4%, and adjusted segment EBITDA fell by 19% from the prior year. However, rising box demand allowed for an industry price increase we hadn't expected. Offsetting good news in corrugated was the closure of boxboard capacity in the consumer segment. We've left our $49 fair value estimate and no-moat rating unchanged. With shares trading about 25% below our fair value estimate, they look compelling.