Zacks Industry Outlook Highlights Smurfit Westrock Plc and Suzano

For Immediate ReleaseChicago, IL – September 26, 2025 – Today, Zacks Equity Research discusses Smurfit Westrock Plc SW and Suzano SUZ.Industry: Paper ProductsLink: https://www.zacks.com/commentary/2756768/2-paper-and-related-products-stocks-to-watch-amid-industry-challengesThe Zacks Paper and Related Products industry has been grappling with subdued demand due to lower consumer spending amid inflation and declining graphic paper demand due to the shift toward digitization. However, increasing packaging requirements due to the rise in e-commerce activities and steady demand from consumer-oriented end markets, such as food and beverages, and healthcare, are expected to support the industry. Increasing environmental awareness is boosting the appeal of paper as a sustainable and eco-friendly packaging alternative, serving as a major growth driver.Companies like Smurfit Westrock Plc and Suzano and are likely to gain from the above-mentioned trends.Industry DescriptionThe Zacks Paper and Related Products industry comprises companies that manufacture and sell paper and paper products. The industry is highly diversified in terms of products, ranging from graphic paper and packaging paper to absorbent hygiene products. Graphic papers, which include printing and writing papers, and newsprint, are utilized for communication purposes.The industry provides packaging solutions for liquid, food, pharmaceutical, beauty, household, commercial and industrial products. It also produces fluff and specialty pulps utilized in absorbent hygiene products, tissues and paper products.The industry caters to a wide array of industries, including food and beverage, farming, home and personal care, health, retail, e-commerce, and transport. The industry players meet customers' shipping, storage and display requirements with sustainable solutions.Major Trends Shaping the Future of the Paper and Related Products IndustryWeak Demand, High Costs & Tariffs Remain Concerns: The transition to digital media has undermined the demand for the graphic paper market for some time now. Paperless communication, increased use of email, less print advertising, electronic billing and fewer catalogs have dented graphic paper demand. This shift has prompted companies in the industry to convert their production lines to focus on packaging and specialty paper to stay relevant.However, the packaging demand has also lately been impacted and the companies in the industry have been witnessing volume declines due to lower consumer spending on goods, reflecting the inflationary scenario. They had to cut down production levels to align with customer demand. The industry is witnessing rising costs for transportation, chemicals and fuel.Thus, industry players are increasingly focusing on pricing actions and cost reduction, and resorting to automation in manufacturing to boost productivity and efficiency. The impacts of tariffs add to the industry's concerns.E-commerce & Consumer Products to Support Packaging Demand: Despite the current headwinds, the industry's exposure to consumer-focused markets, such as food, beverages and healthcare, ensures stable earnings growth. With the rise of e-commerce, packaging has gained the utmost importance as it helps maintain the integrity of the products and withstand the complexities of delivery.E-commerce is expected to surge due to rising Internet penetration, widespread smartphone adoption and the convenience of shopping online. Additionally, advancements in digital payments, logistics and personalization are making the online shopping experience faster, safer and more customer-centric. This presents a major growth opportunity for the Paper and Related Products industry.Increased M&A Activities to Transform the Paper & Packaging Landscape: Increasing demand for sustainable packaging options and eco-friendly packaging solutions will support the paper market in the days ahead. Smurfit Westrock was formed by merging two major paper and packaging industry players, Smurfit Kappa and WestRock, son July 5, 2024.With an unmatched geographic reach spanning 42 countries and the two companies' highly complementary portfolios and innovative sustainability capabilities, Smurfit Westrock is likely to be the preferred packaging partner for companies and customers across the globe. International Paper IP acquired DS Smith, a strategic move to strengthen its corrugated packaging business in Europe and prioritize sustainable packaging.Zacks Industry Rank Indicates Dull ProspectsThe Zacks Paper and Related Products industry is a nine-stock group within the broader Basic Materials sector. The industry currently carries a Zacks Industry Rank #235, which places it in the bottom 4% of the 246 Zacks industries.The group's Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bleak prospects in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.Before we present a few Paper and Related Products stocks that investors can consider, it is worth looking at the industry's stock-market performance and valuation picture.Industry Versus Broader MarketThe Paper and Related Products industry has outperformed the sector but lagged the S&P 500 over the past year. The stocks in this industry have gained 11.2%, while the Basic Materials sector has moved up 3.6%. The S&P 500 composite has grown 18.3% during this time frame.Industry's Current ValuationOn the basis of the trailing 12-month EV/EBITDA ratio, a commonly-used multiple for valuing Paper and Related Products companies, we see that the industry is currently trading at 8.67X compared with the S&P 500's 18.47X and the Basic Material sector's trailing 12-month EV/EBITDA of 14.24X.Over the last five years, the industry has traded as high as 12.45X and as low as 4.42X, with the median being 7.85X.2 Paper and Related Products Stocks to ConsiderSmurfit Westrock: The company is focused on asset optimization and business improvement initiatives. It has been undergoing significant transformation since 2023, wherein it has closed underperforming facilities, divested non-core assets and streamlined operations to drive efficiency and cost savings.These efforts are expected to position the company for long-term growth and profitability. The company is on track to achieve its $400-million synergy target by the end of 2025 from the WestRock and Smurfit Kappa merger. It has identified at least $400 million in further opportunities through enhanced operational and commercial focus. The company is focused on investments to further aid growth, having invested $1 billion so far in 2025, both in the paper system to boost efficiency, sustainability and in the packaging business to enhance quality, service and innovation.The Zacks Consensus Estimate for 2025 earnings for the Dublin, Ireland-based company has remained unchanged in the past 30 days at $2.43 per share. The figure indicates year-over-year growth of around 16.8%. The company currently carries a Zacks Rank #3 (Hold).You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.Suzano: In June, the company inked an agreement with Kimberly-Clark Corporation ("KMB") to acquire a 51% stake in a new joint venture focused on the manufacture, marketing and distribution of consumer and professional tissue products. The deal involves 22 tissue manufacturing plants with a combined annual production capacity of 1 million tons.Suzano is a leading player in toilet paper in Brazil, following the 2023 acquisition of Kimberly-Clark's Brazilian tissue assets and brands. Suzano is also building a new R$650 million ($115 million) tissue paper mill at Aracruz, which will add 60,000 tons of annual capacity to its Consumer Goods Business Unit.In the second quarter of 2025, the company reported sales of 3.7 million tons of pulp and paper, a 28% increase year over year mainly. This reflects strong operational contribution of the new Ribas do Rio Pardo pulp mill, whose production started in July 2024. The previous acquisition of two industrial assets from Pactiv Evergreen in Arkansas and North Carolina also contributed to Suzano's results.The mills manufacture liquid packaging board and cupstock, adding approximately 420,000 metric tons annually of integrated paperboard to Suzano's production capacity. The company aims to scale operations to meet the growing global demand for paper-based packaging.The Zacks Consensus Estimate for 2025 earnings for the Salvador, Brazil-based company has moved up 1.5% in the past 30 days and indicates year-over-year growth of around 299%. The company currently carries a Zacks Rank of 3.Free: Instant Access to Zacks' Market-Crushing StrategiesSince 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. 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Sponsored ADR (SUZ): Free Stock Analysis Report Smurfit Westrock PLC (SW): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks