GREIF, INC (GEF) stock intrinsic value fair value estimate & owner earnings analysis

Greif makes industrial packaging: steel and plastic drums, intermediate bulk containers (IBCs), plastic jerrycans and closures, and fiber drums, tubes, cores and recycled paperboard, sold mostly to chemical, lubricant, food and agricultural producers from plants across North America, Europe, Latin America and Asia. The company has existed since 1877 and the business is cyclical: volumes follow industrial production, and margins swing with how quickly steel, resin and recovered-paper costs are passed on to customers. The company changed shape in 2025. It sold its Containerboard business to Packaging Corporation of America for $1.8 billion (closed August 31, 2025), sold its Soterra timberland business for about $462 million (closed October 1, 2025), moved its fiscal year-end to September 30, and repurchased roughly $150 million of stock. What remains is four segments: Customized Polymer Solutions, Durable Metal Solutions, Sustainable Fiber Solutions and Innovative Closure Solutions. Because the earlier record mixes in the businesses that were sold, we used the ten-year consolidated history only to understand the cycle and built today's earning power from the continuing businesses. Two share classes matter for the per-share figures. Greif's charter distributes dividends one cent to Class A for every one and a half cents to Class B, and the company allocates earnings the same way. All values below are per Class A share (GEF); a Class B share (GEF.B) carries 1.5 times that claim. Earning power. Continuing-business adjusted EBITDA was about $496 million and $511 million in the comparable eleven-month periods of 2024 and 2025, and $463 million in the nine months to June 2026, up from $392 million a year earlier. Sales were flat and volumes weak, so the gain came mainly from a cost program that has reached $90 million of annual savings. Recent quarters run at roughly $625 million a year. We set the normal level at about $600 million, below that run-rate, because part of the recent gain is a favorable steel price-cost spread in metal drums that may not last. From that we deduct about $35 million a year for restructuring and integration costs, which Greif has had in every one of the last eleven years. We also deduct cash taxes of about $76 million, maintenance capital spending of about $150 million, about $7 million of pension funding above expense, and about $22 million belonging to minority partners in joint ventures. That leaves about $310 million a year, or $5.46 per Class A share, before interest. Our own estimate comes in somewhat below management's 2026 adjusted free-cash-flow guidance of $305-325 million, which leaves out several recurring costs. The most recent completed year, an eleven-month transition period, grew continuing adjusted EBITDA about 3%. Our base case assumes no growth in its first year, starting from a level below today's run-rate. Accounting judgements. In the eleven months to September 2025, operating cash flow included $381 million of tax on the Containerboard gain, and early fiscal 2026 included about $114 million of tax on the Containerboard and timberland sales. We treated these as part of the sale proceeds, not as operating costs. We excluded a one-time special charitable contribution made in fiscal 2026. Amortization of about $85-90 million a year on acquired customer relationships (Ipackchem, Lee Container, Reliance, Caraustar) is added back because it is a non-cash accounting charge. Because those relationships can wear away, the base case credits no volume growth and the bear case lets earnings shrink over time. Debt. At June 30, 2026 Greif owed $1,030 million and held $289 million of cash. After adding about $35 million of finance leases and keeping $100 million of cash for operations, net debt is about $877 million, or $15.44 per Class A share. Debt was refinanced in 2026 into $500 million of term loans and an $800 million revolving facility maturing in 2031, at a recent weighted average rate of about 3.1%. Because the rate floats, we made no adjustment for its low current cost. Leverage is about 1.1 times EBITDA, and even the bear case covers interest many times over. Bear case ($51.81): the multi-year industrial contraction that management says shows no sign of turning continues. Fiber volumes keep falling (Sustainable Fiber sales fell 8.8% in the nine months to June 2026) and the metal price-cost spread reverses. Cash flow drops to about $225-235 million for three years, recovers to $265 million, then shrinks 1% a year as paper-based volumes erode. The business is worth about $3.82 billion, owes $0.88 billion, and leaves $2.94 billion for shareholders. Base case ($81.94): cash flow of $310 million rises 1% a year through year ten, as Greif keeps passing raw-material and inflation costs through to customers as it has for decades. After that it holds flat, supported by customer relationships built since 1877, a global plant network and high switching costs for regulated hazardous-goods containers. No volume growth is credited. The business is worth about $5.53 billion, owes $0.88 billion, and leaves $4.65 billion. Bull case ($115.94): the cost program reaches its stated $120 million goal (it is already 75% complete), the June 2026 Envaplast acquisition contributes, and recent pricing holds. Cash flow reaches $340-355 million, grows 2% a year through year ten, then 1% a year. The business is worth about $7.46 billion, owes $0.88 billion, and leaves $6.59 billion. We gave no credit to future large acquisitions, Greif's usual growth route, because each one is a separate bet. Change from our previous estimate. Our August 2026 figures counted Class A and Class B shares as equal claims. Recognizing the Class B's larger distribution right lowers the value per Class A share. Offsetting that, the timberland sale, the debt paydown to about 1.1 times EBITDA and the cost savings are now complete and visible in reported results. That is why the bear case is much higher and the bull case somewhat lower than before. What would make this wrong: a deeper or longer industrial recession than any in Greif's recent record; customers replacing steel drums with other formats faster than Greif's own IBCs and plastic drums can capture; cost savings proving temporary; or new debt-funded acquisitions bought at high prices and later written down, as happened with impairments of $51 million in 2016 and $71 million in 2022. The continuing businesses' results before 2025 are known only from company segment disclosures, because they were reported together with the businesses that were sold.