Consumer packaging solutions provider Graphic Packaging Holding (NYSE:GPK) reported Q2 CY2025 results exceeding the market’s revenue expectations, but sales fell by 1.5% year on year to $2.20 billion. The company expects the full year’s revenue to be around $8.5 billion, close to analysts’ estimates. Its non-GAAP profit of $0.42 per share was 4.9% above analysts’ consensus estimates.
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Graphic Packaging Holding (GPK) Q2 CY2025 Highlights:
- Revenue: $2.20 billion vs analyst estimates of $2.16 billion (1.5% year-on-year decline, 2.1% beat)
- Adjusted EPS: $0.42 vs analyst estimates of $0.40 (4.9% beat)
- Adjusted EBITDA: $336 million vs analyst estimates of $334.6 million (15.2% margin, in line)
- The company lifted its revenue guidance for the full year to $8.5 billion at the midpoint from $8.35 billion, a 1.8% increase
- Management raised its full-year Adjusted EPS guidance to $2.05 at the midpoint, a 2.5% increase
- EBITDA guidance for the full year is $1.5 billion at the midpoint, in line with analyst expectations
- Operating Margin: 8.8%, down from 14.5% in the same quarter last year
- Free Cash Flow was $35 million, up from -$88 million in the same quarter last year
- Market Capitalization: $6.98 billion
Michael Doss, the Company's President and CEO said, "Promotional activity drove modestly better than expected volumes in the second quarter. Conversations with our customers suggest potential for increased emphasis on volume growth and protecting share in the year ahead. As these customers refine their strategies, we are working closely with them to support their plans.
Company Overview
Founded in 1991, Graphic Packaging (NYSE:GPK) is a provider of paper-based packaging solutions for a wide range of products.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Graphic Packaging Holding grew its sales at a mediocre 6.5% compounded annual growth rate. This fell short of our benchmark for the industrials sector and is a tough starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Graphic Packaging Holding’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 5.5% annually. Graphic Packaging Holding isn’t alone in its struggles as the Industrial Packaging industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time. 
This quarter, Graphic Packaging Holding’s revenue fell by 1.5% year on year to $2.20 billion but beat Wall Street’s estimates by 2.1%.
Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. Although this projection suggests its newer products and services will spur better top-line performance, it is still below the sector average.
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Operating Margin
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Graphic Packaging Holding has managed its cost base well over the last five years. It demonstrated solid profitability for an industrials business, producing an average operating margin of 10%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.
Analyzing the trend in its profitability, Graphic Packaging Holding’s operating margin rose by 4.1 percentage points over the last five years, as its sales growth gave it operating leverage. Its expansion was impressive, especially when considering the cycle turned in the wrong direction and most of its Industrial Packaging peers observed plummeting revenue and margins.
In Q2, Graphic Packaging Holding generated an operating margin profit margin of 8.8%, down 5.7 percentage points year on year. Since Graphic Packaging Holding’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Graphic Packaging Holding’s EPS grew at a spectacular 16.7% compounded annual growth rate over the last five years, higher than its 6.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
Diving into Graphic Packaging Holding’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, Graphic Packaging Holding’s operating margin declined this quarter but expanded by 4.1 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For Graphic Packaging Holding, its two-year annual EPS declines of 10.4% mark a reversal from its (seemingly) healthy five-year trend. We hope Graphic Packaging Holding can return to earnings growth in the future.
In Q2, Graphic Packaging Holding reported EPS at $0.42, down from $0.60 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 4.9%. Over the next 12 months, Wall Street expects Graphic Packaging Holding’s full-year EPS of $2.16 to stay about the same.
Key Takeaways from Graphic Packaging Holding’s Q2 Results
This was a 'beat and raise' quarter. We enjoyed seeing Graphic Packaging Holding beat analysts’ revenue expectations this quarter. We were also happy its EPS outperformed Wall Street’s estimates. Looking ahead, the company raised its full-year guidance. Overall, this print had some key positives. The stock traded up 3.8% to $24 immediately following the results.
Should you buy the stock or not? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.