- If you are wondering whether Silgan Holdings is attractively priced or just a value trap, this article walks through the key signals that matter for you as a shareholder or potential buyer.
- The stock last closed at US$38.06, with returns of an 8.6% decline over 7 days, a 21.1% decline over 30 days, a 7.7% decline year to date, a 22.1% decline over 1 year, a 22.0% decline over 3 years and a 4.5% decline over 5 years, which may have changed how the market views its risk and reward profile.
- Recent news coverage around Silgan Holdings has focused on its role in the packaging sector and how investor sentiment has shifted alongside broader moves in materials and industrial names. This backdrop helps explain why the share price performance has been weak, even as some investors are starting to revisit the stock with valuation in mind.
- Right now, Silgan Holdings scores a full 6 out of 6 on our valuation checks. The sections that follow will compare different valuation approaches for the stock and will also hint at a more complete way to think about value that appears at the end of this article.
Find out why Silgan Holdings's -22.1% return over the last year is lagging behind its peers.
Approach 1: Silgan Holdings Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model takes the cash that a company is expected to generate in the future and discounts those amounts back to today to estimate what the business might be worth right now.
For Silgan Holdings, the model uses a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The latest twelve month Free Cash Flow is about $448 million. Analysts provide explicit forecasts out to 2028, with Free Cash Flow projected at $468.33 million, and further years are extrapolated by Simply Wall St, reaching about $570.64 million by 2035.
After discounting this stream of cash flows back to today, the DCF model arrives at an estimated intrinsic value of about $82.79 per share. Against the recent share price of US$38.06, this implies the stock is about 54.0% below the DCF estimate, which indicates a substantial valuation gap on this measure alone.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Silgan Holdings is undervalued by 54.0%. Track this in your watchlist or portfolio, or discover 52 more high quality undervalued stocks.
Approach 2: Silgan Holdings Price vs Earnings
For a profitable company like Silgan Holdings, the P/E ratio is a useful way to see what price you are paying for each dollar of earnings. Investors usually accept a higher or lower P/E depending on what they expect for future growth and how risky they think those earnings are, so there is a range of what can look like a normal or fair P/E.
Silgan Holdings currently trades at about 13.9x earnings. That is below both the Packaging industry average P/E of roughly 15.6x and a peer average of about 17.9x. Simply Wall St also calculates a proprietary “Fair Ratio” of 19.3x for Silgan Holdings, which reflects factors such as its earnings profile, industry, profit margins, size and risk characteristics.
This Fair Ratio is more tailored than a simple comparison with peers or the industry because it attempts to line up the P/E with the company’s specific fundamentals rather than broad group averages. Set against this 19.3x Fair Ratio, the current 13.9x P/E suggests the shares are trading below what that framework would consider a fair level.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your Silgan Holdings Narrative
Earlier it was mentioned that there is an even better way to understand valuation, so this is where Narratives come in, giving you a simple story that ties together your view on Silgan Holdings, the forecasts you think are reasonable for revenue, earnings and margins, and the fair value that falls out of those assumptions so you can compare it with today’s price.
On Simply Wall St’s Community page, Narratives let you set out that story in a structured but accessible way, link it directly to a set of numbers, and then see how your Fair Value stacks up against the current share price to help you decide whether the stock looks expensive or cheap on your assumptions.
These Narratives update automatically when fresh information such as news or earnings is added, and you can see very different stories side by side. For example, a more optimistic Silgan Holdings view that points to a Fair Value around US$75.00 versus a more cautious view closer to US$47.00, which shows how reasonable investors can look at the same company and reach very different conclusions about what the shares are worth today.
Do you think there's more to the story for Silgan Holdings? 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.
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