Smurfit Kappa is undervalued: Davy

Irish packaging group Smurfit Kappa Group is undervalued compared to similar companies operating in the same sector, according to Davy Stockbrokers.

Davy’s analyst Barry Dixon said they were forecasting better performance from the packaging group as the price of its product, Kraftliner, and a cost-cutting programme across the organisation will result in a higher returns in the company.

“Based on these revised assumptions, we expect the company to generate over €218m in free cash flow this year, resulting in net debt declining to just over €2.5bn by year-end from €2.75bn at the end of 2011,” said Mr Dixon.