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WestRock Co A WRK

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Morningstar’s Analysis

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Economic Moat




WestRock's Margins Soften, but Higher Prices Point to Improvement by the Middle of Fiscal-Year 2021

Charles Gross Equity Analyst

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.

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Company Profile

Business Description

WestRock manufactures corrugated packaging and consumer packaging such as folding cartons and paperboard. After the merger of RockTenn and MeadWestvaco in fall 2015, WestRock became the largest North American producer of solid bleached sulfate and the second- largest producer of containerboard, which is used in the production of shipping containers.

1000 Abernathy Road NE
Atlanta, GA, 30328
T +1 770 448-2193
Sector Consumer Cyclical
Industry Packaging & Containers
Most Recent Earnings Sep 30, 2020
Fiscal Year End Sep 30, 2020
Stock Type Cyclical
Employees 49,300