GEF

Greif ($GEF) $1.8B Business Sale Boosts Stock, Yet Executives Sell $3.3M Worth...Mixed Signals Emerge

07/11/2025 15:38

Industrial packaging specialist Greif ($GEF) is sending mixed signals to investors with its recent stock surge coupled with significant executive selling patterns. Founded in 1877, the company is a global leader in manufacturing steel drums, plastic containers, and fiber packaging materials, employing approximately 14,000 people worldwide. Despite being a small-cap stock with a market capitalization of $1.37 billion, Greif has established a solid position in the industrial packaging sector. Greif's stock price, which was trading at $54.38 in early June, surged 19% within a month to reach $64.99. This rally coincided with the July 1 announcement of the sale of its Containerboard business to Packaging Corporation of America (PKG) for $1.8 billion. This massive transaction, representing 130% of Greif's market cap, is interpreted as a strategic decision to focus on core operations and reduce debt. However, concurrent executive selling has drawn attention. President Ole Rosgaard sold approximately 53,000 shares across five transactions from June 9 to July 8, totaling $3.32 million at average prices ranging from $65.93 to $70.00. Senior Vice President Kimberly Kellermann also sold 9,000 shares at $67.60 on July 1. Interestingly, regulatory filings indicate these sales were primarily for purchasing new residences. Investors must carefully assess whether these selling patterns reflect purely personal purposes or signal management's view that current stock levels are appropriate. Rosgaard's consecutive sales to cash out a substantial portion of his holdings is particularly noteworthy. From a financial perspective, Greif presents both opportunities and risks. Third-quarter 2024 revenue increased 9.3% year-over-year to $1.45 billion, but earnings per share declined significantly to $1.03 from $1.75 in the prior year. More concerning is the debt-to-equity ratio of 133%, which exceeds industry averages. However, the $1.8 billion from the containerboard sale is expected to substantially address these debt issues. The company's Global Industrial Packaging segment continues showing robust growth. Third-quarter segment revenue increased 11.1% year-over-year to $846 million, with adjusted EBITDA of $122 million exceeding analyst expectations. Conversely, the Paper Packaging & Services segment, despite revenue growth, underperformed profitability expectations. A key variable for investors is the utilization of sale proceeds. The company plans to use these funds primarily for debt repayment, which could improve financial health and reduce interest expenses. The current 3.32% dividend yield and sustainable 58% payout ratio remain positive factors. Market experts maintain an optimistic outlook on Greif. The stock carries a Zacks Rank of 2 (Buy) with a 12-month price target of $67.00, roughly aligned with current levels. However, recent executive selling and profitability pressures could heighten short-term volatility. Future prospects present several scenarios. The most optimistic case involves successful completion of the containerboard sale, with debt reduction-driven financial health improvements translating to stock appreciation. Focusing on core operations could also enhance profitability. Conversely, the risk scenario involves continued executive selling undermining market confidence, combined with industrial packaging market slowdown pressuring performance. In conclusion, Greif stands at a crossroads. Strategic asset divestiture for portfolio streamlining and debt reduction are clearly positive factors. However, executive selling and profitability pressures pose short-term risks. Investors should carefully monitor the next earnings release scheduled for late August and track the specific execution of sale proceeds utilization plans.