Bubble Wrap at a Non-Bubble Valuation

Sealed Air SEE is best known for the ubiquitous bubble-wrap it developed years ago. It is a world leader in general packaging products, which provide food and safety security and product protection for shipping and storage.

The graphics I will be showing you today were based on SEE’s Mar. 11, 2025 closing quote of $30.26. As of Wednesday morning it had fallen to as low as $29.83 while yielding 2.68%.

There is nothing wrong with SEE’s long-term growth. Despite significant value creation over the past decade the crazy market now allows us to buy shares 33.4% lower than its exactly 10-year ago price.

Sealed Air is no stranger to selloffs. There have been major downturns since 2018. Each proved to be great buying opportunities.

The four rebounds averaged gains of 112.3% over average holding periods of just 10 months. Exclude the outsized 311.5% surge from the Covid-panic bottom and the other three run-ups still tacked on average progress of 45.7% over just 5.7 months or so.

Buying SEE now, near it lowest multiple since the Covid period, should prove quite rewarding.

What Is SEE Worth?

Its typical P/E has run about 18x over the past decade, with a wide variation over time based on GAAP earnings but a tighter range when using adjusted earnings. A normalized yield is around 1.70%.

At Wednesday morning’s $29.83, Sealed Air’s forward multiple on adjusted EPS is just 9.6x, accompanied by a historically rich 2.68% current yield.

Reverse engineering the 80-cent annual dividend to 1.7% generates a $47.06 present day fair value estimate. That implies upside potential of almost 58% plus dividends.

Assign a less-than-average 17x multiple to 2025’s company supplied guidance of about $3.10 calculates to a 12-month target of $52.70.

Both my goal prices appear quite reasonable, or even too conservative.

SEE fetched peak prices of $68 during 2021 and $70.37 in 2022 on EPS not too far above this year’s projected EPS.

Value Line sees $45 as a mid-point goal 18 months out with $62 as its higher-end possibility. Look further into the future and they see $65 to $95 as likely within three to five years.

Note, too, that none of those lofty goals include dividends.

Yahoo Finance takes a more conservative view in terms of year ahead price action. Even so, its $40.87 goal would provide a solid 38% or so from the Wednesday quote.

That target appears low to me as it implies SEE would trade for only 13.2x Yahoo Finance’s own estimate for SEE’s 2025 EPS, well below its typical valuation.

FASTgraphs calls SEE’s average P/E as 16.6x, rather than 17x or 18x. That still figures to push SEE shares up to around $51.46 by next winter. Would you be okay if this stock only delivers “only” 73% or so by then?

The 18 analysts at TipRanks are even split on SEE with half at “buy” and half at “hold.” There are no “sell” ratings at all.

Their mid-range goal price of $42 implies 12-month total return of over 40%. Hitting their more optimistic target of $48.80 will provide about 64% in total return.

A Sealed Air director has indicated that he believes the shares are undervalued. He reported a 1,120-share open market purchase at $30 per share on March 11, 2025.

Value Line’s final paragraph in its current week’s new full-page report on SEE concluded with this…

“These shares may appeal to a variety of investors. Though neutrally ranked for the year ahead, the issue holds wide capital appreciation potential over the 18-month and 3 to 5-year spans. Moreover the equity has a good dividend yield and healthy long-term total return prospects.”

Note that SEE was quoted at $32.59 at the time that was published. We can now own SEE $2.76 per share cheaper.

More Paul Price:

At the time of publication, price was long SEE shares, short SEE options.