The Amcor (ASX:AMC) share price has lost 8% in 4 weeks. What’s happening?

Are global supply chain issues at fault?

| More on:
a woman looks disappointed with a package she has unpacked holding her arms up at a box with bubble wrap beside it.

Image source: Getty Images

Investors watching the Amcor plc (ASX: AMC) share price probably want to pack it up and send it away. Over the past month, shares in the blue-chip company have fallen hard – losing 7.87% in that time. The S&P/ASX 200 Index (ASX: XJO), meanwhile, is only 2.89% lower.

By the end of trade on Tuesday, shares in the packaging manufacturer were 0.24% lower to $16.33 despite the ASX 200 ending 0.35% higher.

While the company hasn’t made any price-sensitive announcements in that time, something is clearly spooking investors.

Let’s take a closer look.

Amcor FY21 results

While announced just over a month ago, investors may still be analysing the entrails of the Amcor FY21 results. It’s possible they could still be affecting the Amcor share price.

To recap, for the 12 months to 30 June, Amcor declared the following:

  • Net income of $939 million (up 53%).
  • Earnings per share (EPS) of 60.2 cents (up 58%).
  • Adjusted free cash flow of $1.1 billion, which was at the upper end of its guidance.
  • An annual dividend of 47 cents per share, including a final dividend of 11.75 cents per share.

Looking forward, Amcor says it expected a strong financial year but that COVID-19 created “a high degree of uncertainty” for the company. It forecast EPS to grow between 7% to 11% by the end of FY22, which would be somewhere between 79 to 81 cents.

Amcor is also looking to purchase $400 million worth of shares off the market this financial year.

This predicted uncertainty may be one reason for the lagging Amcor share price.

Is the delta variant affecting the Amcor share price?

Being a global packaging company, supply chain logistics for most industries, but especially consumer goods, are crucial for Amcor’s financial performance. More goods being shipped means more packaging needed which, in turn, means more revenue for Amcor and potentially a better Amcor share price.

However, there are currently constraints in the global supply chain.

As Alastair MacLeod of Wheelhouse Partners wrote:

“Historically the global supply chain, and the shipping industry that underpins it, operates in an orderly market with a relatively smooth flow of containers and ships around the world. However, due to the stop-start nature of the current economy, this orderly flow has been majorly impacted.”

MacLeod goes on to list several examples where the delta variant has caused supply issues – such as the shutdown of China’s third busiest port, Ningbo, and a shortage of truck drivers in the US.

As well as a shortage in supply, MacLeod argues there has been a spike in demand in “durable goods” such as vehicles and white goods because of the pandemic. Consumers haven’t been able to spend their money on holidays and leisure and so have turned to purchasing products, usually online.

“Pre-pandemic supply chains were not designed for this level of sharp demand shift and this imbalance and demand for containers is impacting the traditional flow of goods in every other global market,” according to MacLeod.

These supply chain issues may be another reason for the falling Amcor share price.

Amcor share price snapshot

Over the past 12 months, the Amcor share price has risen 5.76%. This is a 19-point underperformance of the ASX 200. Year-to-date, it is 6.45% higher. This also falls short of the performance of the benchmark index.

The company has a market capitalisation of around $25 billion.

Should you invest $1,000 in Amcor right now?

Before you consider Amcor, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Amcor wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor Marc Sidarous owns shares of Amcor Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Amcor Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Materials Shares

a man sits on a rocket propelled office chair and flies high above a city
IPOs

Aurora Energy Metals share price rockets 35% on ASX debut

This lithium and uranium explorer debuted the ASX in style.

Read more »

A fit man flexes his muscles, indicating a positive share price movement on the ASX market
Materials Shares

‘Strong demand’: Bluescope share price strengthens on guidance upgrade

BlueScope is heading for blue skies today...

Read more »

A group of three builders wearing worker overalls and carrying hard hats in their hands jumps jubilantly atopa rooftop space on a commercial building with an airconditioner shaft in the background and the sun behind a light cloud behind them.
Broker Notes

Why is the James Hardie share price surging higher today

We look at what's driving the recovery in the building materials company's shares on Wednesday.

Read more »

a sad looking engineer or miner wearing a high visibility jacket and a hard hat stands alone with his head bowed and hand to his forehead as he speaks on a mobile telephone out front of what appears to be an on site work shed.
Materials Shares

Boral share price down 3% on earnings hit

Boral shares are trading lower on Wednesday...

Read more »

three young children weariing business suits, helmets and old fashioned aviator goggles wear aeroplane wings on their backs and jump with one arm outstretched into the air in an arid, sandy landscape.
Materials Shares

Battery-powered! 3 ASX mining shares up more than 50% in 2022

What's driving these explorers' shares higher?

Read more »

man looking at laptop waiting for Pilbara Minerals trading halt to end
Materials Shares

When will AVZ Minerals shares start trading on the ASX again?

Here are all the details on the company's extended trading halt and when it's expected to end.

Read more »

Woman looks amazed and shocked as she looks at her laptop.
Materials Shares

Here’s why the Calix share price is leaping 6% on Tuesday

The environmental technology company’s shares are on the rise after a joint announcement with Pilbara Minerals.

Read more »

Sad Probuild construction worker in front of half built house puts his hand to his forehead as he talks on the phone
Earnings Results

James Hardie share price stumbles despite 36% lift in annual sales

Both quarterly and yearly net income figures increased markedly.

Read more »