Amcor plc (AMCR) stock intrinsic value fair value estimate & owner earnings analysis

Amcor makes the packaging that sits around everyday consumer and healthcare products. Its flexible packaging (films, pouches, lidding; about 55% of fiscal 2026 sales) and rigid packaging (bottles, containers, closures, dispensing and pharma delivery devices; about 45%) are made at roughly 190 and 210 facilities respectively, each spanning 33 countries. North America is about half of sales, with Europe, Latin America and Asia Pacific making up the rest. No customer exceeds 10% of sales. Raw-material cost swings (mostly resin) are passed through to customers, so profit depends on volumes, price/mix and plant costs rather than commodity prices. What changed the business: on April 30, 2025 Amcor acquired Berry Global, growing net sales from $15.0 billion in fiscal 2025 to $23.5 billion in fiscal 2026. Because of that, we measure the business from fiscal 2026, the first full year with Berry, and do not treat the earlier, smaller Amcor as representative. Amcor also did a 1-for-5 reverse share split on January 14, 2026; all per-share figures here are on the post-split basis. Cash earnings: we start from operating cash flow, remove the swings in receivables, inventories and payables, deduct share-based compensation as a real cost, and deduct only the portion of capital spending needed to keep plants running (spending tied to growth is excluded, using Amcor's average capex of about 3.6% of sales). On that basis fiscal 2026 produced about $1.54 billion, or $3.31 per share on 463.8 million diluted shares. Before Berry the per-share figure ranged from $2.49 to $3.90 over fiscal 2020 to 2025 (median about $2.83) with no upward trend. Fiscal 2026 rose 33% from $2.49, but that jump is Berry's full-year contribution, not organic growth. Depreciation and amortization ($1.48 billion in fiscal 2026) are non-cash and are already excluded from the calculation; amortization of acquired intangibles does not need to be replaced with cash, but it is one reason we do not assume growth. What we credit and what we leave out: underlying sales fell in fiscal 2026 (excluding Berry, currency and raw-material pass-through, volumes were down about 1% in flexibles and about 3% in rigid packaging, with price/mix about 1% lower in rigid). With volumes shrinking and a demonstrated record of flat per-share cash earnings, no growth is credited in the base case; year 1 is set at 0%, at or below the 33% trailing figure, which came from the acquisition. Management's target of about $650 million of annual pre-tax cost savings from the Berry merger by the third year after the merger (2028) is a target, not a contract, so the base case leaves it out. The savings are visibly starting (the integration program has already produced about $107 million of restructuring cash outflows and cost performance helped fiscal 2026 profit), so we include a portion of them only in the bull case. Base case ($55 per share): cash earnings stay at about $3.30 per share indefinitely, supported by staple consumer and healthcare demand, no single-customer dependence, and about seven years of flat per-share earnings through inflation, a large acquisition and a downturn in volumes. That is $3.30 discounted at 6%. Bear case ($33 per share): Amcor carries about $14.0 billion of debt, so the cash it earns is after a large interest bill, and there is limited room if volumes keep slipping. We assume earnings settle at $2.70 per share (near the lowest levels of fiscal 2023 to 2025 of $2.49 to $2.74) and then decline 2% a year, matching current volume and price/mix trends, with the Berry savings mostly absorbed by lower volumes. Fiscal 2026 also included inventory discrepancies, including errors from prior periods, that led to two Asian plant closures, which is an example of the integration risk in this case. Bull case ($69 per share): the integration program delivers, and roughly $400 million a year of after-tax savings, drawn from the $650 million pre-tax target, reaches cash earnings over three years, lifting them from $3.31 to about $4.20 per share, then holding flat. We use only a portion of the target because it is management's own estimate and volume declines would offset part of it. What would make this wrong: a further decline in volumes beyond the recent 1 to 3% pace, refinancing debt at materially higher rates, or Berry-related integration costs (about $245 million of planned net cash outlays, roughly $107 million spent on restructuring so far) running higher or longer than planned would push value toward the bear case. Amcor also sells trade receivables, which flows through operating cash flow. We could not fully reconcile all items in the fiscal 2026 cash flow statement to net income (other non-cash and operating lines, including a $146 million negative "other, net"), so the level could be modestly different. Shares appear to be worth about $55 in the middle case, with a range of $33 to $69. Given the debt load and shrinking volumes, the margin-of-safety price is set close to the bear case, at around $36.