• If you are wondering whether Amcor's recent share price moves still leave value on the table, you are not alone. This article is aimed at helping you weigh that up clearly.
• Over the short term, the stock has had a 4.8% decline over 7 days, but an 8.8% return over 30 days and a 14.5% return year to date, with a 0.7% return over 1 year, 2.1% over 3 years and 3.9% over 5 years. Taken together, these figures give a mixed picture of momentum and risk sentiment.
• This article was prompted to keep ongoing coverage of Amcor current for investors who track it regularly, rather than by a single major headline event. That makes it a good moment to step back, look at how the market has been reacting over different periods, and line that up with what the valuation picture is telling you.
• On our valuation checks, Amcor currently has a valuation score of 2 out of 6, which means it screens as undervalued on two of the six methods we apply. Next we will walk through those approaches before finishing with a way to look at value that goes beyond any single model.

Amcor scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Amcor Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model takes the cash Amcor is expected to generate in future years, then discounts those amounts back to today to estimate what the business could be worth right now.

For Amcor, the latest reported Free Cash Flow is about $850.0 million. Analysts provide explicit forecasts for the next few years, and Simply Wall St extends those out using its own assumptions, resulting in projected Free Cash Flow of $1,939 million in 2029 and further estimates through 2035. All of these future cash flows are discounted to today using a 2 Stage Free Cash Flow to Equity model.

On this basis, the DCF model arrives at an estimated intrinsic value of $77.14 per share. Compared with the current share price, this implies a 37.6% discount, which indicates the market price is below what this cash flow model suggests.

This is only one lens on value. However, it points to Amcor trading at a meaningful gap to its DCF estimate.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Amcor is undervalued by 37.6%. Track this in your watchlist or portfolio, or discover 45 more high quality undervalued stocks.

Approach 2: Amcor Price vs Earnings

For profitable companies like Amcor, the P/E ratio is a useful way to connect what you pay for each share with the earnings that support that price. It gives you a quick check on how many dollars of price the market is attaching to each dollar of earnings.

What counts as a “normal” P/E depends a lot on growth expectations and risk. Higher expected earnings growth or lower perceived risk can justify a higher P/E, while slower expected growth or higher risk usually point to a lower multiple being more reasonable.

Amcor currently trades on a P/E of 37.31x. That sits above both the Packaging industry average of 16.66x and a peer average of 24.36x. Simply Wall St also calculates a Fair Ratio of 26.85x for Amcor, which is the P/E level suggested by factors such as its earnings growth profile, industry, profit margin, market cap and risk characteristics.

The Fair Ratio is more tailored than a simple comparison with peers or the industry, because it adjusts for the specific combination of growth, profitability, size and risk for this company. With the current P/E above the Fair Ratio, this multiple based view points to the shares screening as overvalued on earnings.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Amcor Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple tool on Simply Wall St’s Community page where you connect your story about Amcor with your own assumptions for future revenue, earnings, margins and fair value. You can then compare that fair value with today’s price and see it update automatically as news or earnings arrive. For example, one investor might build a cautious Amcor Narrative around a fair value of about US$5.00 using lower growth and profitability estimates, while another might build a more optimistic Amcor Narrative with a fair value closer to US$53.49 based on higher growth and margin expectations. Both can quickly see how their story, forecast and valuation line up with the current share price.

For Amcor however we will make it really easy for you with previews of two leading Amcor Narratives:

Fair value in this bullish Narrative: US$53.49 per share

Implied discount to this fair value at the last close of US$48.15: about 10%

Revenue growth assumption in this Narrative: 7.00% per year

• Analysts in this Narrative see the Berry Global combination and portfolio reshaping helping Amcor capture synergies, focus more on higher growth health and nutrition end markets, and support earnings and margin expansion.
• The story leans on Amcor's broader footprint in Asia Pacific and Latin America, plus its focus on sustainable packaging, as ways to support demand, pricing power, and more consistent free cash flow over time.
• Key risks flagged include persistent weak volumes, uncertainty around divesting or restructuring roughly US$2.5b of sales under review, high leverage at about 3.5x, and the chance that synergy targets or asset sale proceeds fall short of expectations.

Fair value in this cautious Narrative: US$5.00 per share

Implied premium to this fair value at the last close of US$48.15: very large (around 9x the Narrative fair value)

Revenue growth assumption in this Narrative: 4.19% per year

• This author likes Amcor's scale, global reach, and long dividend record, but highlights weaker current return on equity of about 4.2%, softer operating margins near 9.8%, and elevated leverage with net debt around 3.4x EBITDA.
• The Narrative points out that while the dividend yield is above 6% and the stock looks cheaper on price to book and normalized earnings, current P/E of 27.53x on GAAP earnings and a payout ratio above 100% raise questions on valuation and payout sustainability.
• Across different valuation methods, the conclusion is that the share price sits in a wide range between appearing expensive on a conservative DCF, yet more reasonable on asset based and normalized earnings metrics, so the author lands on a cautious hold stance while waiting for clearer merger benefits.

Do you think there's more to the story for Amcor? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.