VRTV short pitch:
– Veritiv is mostly a B2B distributor of print and packaging.
– Company has been benefiting from a temporary tight market due to both supply chain struggles and elevated demand during COVID allowing VRTV to opportunistically increase its pricing.
– Now, the market wrongly perceives that these elevated margins are sustainable.
– Cyclical packaging market began to loosen in Q3 2022 and the print market should follow suit.
– VRTV’s stock is expected to be under pressure as margins begin to normalize in 2023.
VRTV valuation:
– Veritiv is valued at E2023 net debt (to include cash from divestment) and 7.0x E2024 Adj. EBITDA.
– Discounted back this results in a $72/share price target.
Exp. gain: 47%
Full write-up (free guest account required):
https://www.valueinvestorsclub.com/idea/VERITIV_CORP/4959819665#description