Greif's Q3 2025 Earnings: A Closer Look at Valuation Realism and Investor Sentiment Shifts

Greif (GEF) has navigated a complex earnings landscape in Q3 2025, balancing a decline in reported net income with robust adjusted performance and strategic cost optimization. The company's fiscal third-quarter results, released on August 27, 2025, in a Greif press release, revealed a net income of $39.3 million, or $0.67 per diluted share, a 49.6% drop year-over-year, primarily due to a one-time gain from the Delta Divestiture in 2024. However, excluding adjustments, net income rose 11.6% to $60.4 million, or $1.03 per share, while Combined Adjusted EBITDA climbed 11% to $220.9 million, as noted in the press release. These figures underscore a deliberate shift toward operational efficiency, with adjusted free cash flow surging to $170.7 million-a $136.4 million increase from the prior year-and run-rate cost savings of $20 million achieved by Q3's end, according to the same release.

Valuation Realism: P/E and P/B Ratios in Context

Greif's valuation metrics suggest a stock trading at a discount relative to its historical norms. As of August 25, 2025, the company's P/E ratio stood at 18.02, up 23% from its four-quarter average of 14.7, according to the FullRatio P/E page. This increase reflects improved earnings performance but remains below the S&P 500's average P/E of 22. Meanwhile, the price-to-book (P/B) ratio of 1.04-a measure of market value relative to book value-places Greif near the lower end of its 13-year historical range (1.35 to 3.73), per the GuruFocus book value data. With a median P/B of 2.19 over this period, the current valuation implies potential undervaluation, particularly given the company's strong free cash flow generation and cost discipline.

Investor Sentiment and Analyst Outlook

Investor sentiment post-earnings was cautiously optimistic. Greif's stock price rose 3.41% following the report, driven by a 9.96% EPS beat and a 13.18% revenue outperformance, as captured in an Investing.com transcript. Analysts, however, remain divided, with six Wall Street analysts issuing four "Hold" ratings and two "Buy" ratings, resulting in a consensus "Hold" from the MarketBeat forecast. Despite this, price targets suggest optimism: analysts project a 23.95% upside, averaging $75.80 per share over the next 12 months, according to MarketBeat. This contrast between short-term caution and long-term optimism highlights a recalibration phase for investors, who are weighing near-term volatility-such as a 5.0% weekly decline and 9.6% year-to-date drop-against the company's structural improvements reported by Yahoo Finance.

Strategic Divestitures and Long-Term Value

Greif's strategic divestitures, including its Containerboard Business and timberlands, are central to its value-creation narrative. These moves, coupled with $20 million in run-rate savings by Q3's end, signal a focus on core operations and margin expansion, as noted in the Greif press release. While the stock's five-year total return (32%) lags behind its 6% annualized share price growth, the 2.0% compound annual EPS growth suggests a disconnect between earnings fundamentals and market pricing reported by Yahoo Finance. This divergence may present an opportunity for investors who view Greif's current valuation as a mispricing relative to its adjusted performance and long-term operational trajectory.

Conclusion

Greif's Q3 2025 results reflect a company in transition, balancing near-term headwinds with strategic clarity. The adjusted metrics-particularly the 11% EBITDA growth and strong free cash flow-paint a picture of operational resilience, while valuation metrics like the P/B ratio suggest undervaluation. However, the stock's recent volatility and mixed analyst ratings indicate that investor sentiment remains in flux. For long-term investors, the key question is whether Greif's cost optimization and divestiture-driven focus can sustain earnings momentum and justify the current discount.