Sealed Air: Navigating a Shifting Packaging Landscape—Is This Undervalued Reformer a Buy?

The global packaging industry, long a cornerstone of industrial demand, now faces a paradox: secular growth in e-commerce and food preservation is offset by margin compression, input cost volatility, and shifting consumer preferences toward sustainability. Sealed Air Corporation (SEE), once a bellwether of this sector, has spent the past decade navigating these headwinds. But in 2025, the company appears to be at a pivotal inflection point. Its CTO2Grow transformation program, aggressive cost discipline, and sustainability-driven innovation have begun to yield tangible results. The question for investors is whether these efforts are enough to justify a long-term bet on a company that has underperformed its peers for years.

Strategic Transformation: A Work in Progress

Sealed Air's 2023 financial results painted a mixed picture. Net sales fell 3% to $5.5 billion, with organic declines of 6% driven by weak demand in North America and Europe. Yet, beneath the surface, the company's restructuring efforts showed promise. Adjusted EBITDA of $1.107 billion (20.2% of sales) reflected a 9% decline year-over-year but was bolstered by $22 million in restructuring costs and $122 million in special items tied to the Liquibox acquisition. By 2025, the CTO2Grow program had matured. In Q2 2025, Adjusted EBITDA rose 2.5% to $293 million (21.9% of sales), driven by productivity gains and lower operating costs. The Food segment, despite flat sales, achieved a 3% EBITDA increase, while the Protective segment's EBITDA margin held steady at 17.8% despite a 3% sales drop.

The key to Sealed Air's turnaround lies in its ability to reallocate capital. The company has shifted resources from low-growth fulfillment portfolios to high-margin industrial and food packaging. For instance, the Protective segment's industrial portfolio now shows volume growth, a reversal from prior years. This pivot mirrors broader industry trends: e-commerce logistics and industrial automation are driving demand for durable, customizable packaging solutions.

Cost Discipline: A Double-Edged Sword

Sealed Air's cost-cutting measures have been aggressive but not without trade-offs. The CTO2Grow program, which includes $22 million in restructuring expenses in 2023 and $38 million in Q2 2025, has reduced operating costs and improved margins. However, these savings come at the expense of short-term earnings volatility. For example, GAAP net earnings in Q2 2025 fell to $0.64 per share from $0.67 in 2024, largely due to special items. Investors must weigh whether these short-term costs are justified by long-term operational resilience.

The company's debt management strategy further underscores its focus on discipline. Net leverage stood at 3.6x as of June 2025, down from 3.9x in late 2023. Sealed Air has repurchased $300 million in senior notes and prioritized free cash flow generation, which, while down 60% year-to-date, remains robust at $81 million. This financial prudence is critical in a sector where working capital efficiency and liquidity are lifelines.

Sustainable Innovation: A Strategic Differentiator

Sealed Air's sustainability initiatives, while ambitious, are no longer aspirational. The company's goal to make 100% of its packaging recyclable or reusable by 2025 is already materializing. For example, its CRYOVAC® food packaging now incorporates 30% post-consumer recycled content, and its Liquibox system has reduced plastic waste by 40% in key markets. These innovations align with regulatory tailwinds, such as the EU's Single-Use Plastics Directive and the U.S. Inflation Reduction Act's tax incentives for green manufacturing.

However, sustainability is not just a compliance play—it's a revenue driver. Sealed Air's automated and digital packaging solutions, such as its AUTOBAG® system, are gaining traction in e-commerce, where speed and customization are paramount. In Q2 2025, the Food segment's pricing power (a 2% increase) was partly attributable to these premium, sustainable offerings.

Valuation and Risks: A Calculated Bet

Sealed Air's stock trades at a discount to its historical average, with a forward P/E of 12x and a P/EBITDA of 8.5x. These multiples reflect skepticism about its ability to sustain margin expansion in a cyclical industry. Yet, the company's 2025 guidance—$1.075–$1.175 billion in Adjusted EBITDA and $2.90–$3.30 in Adjusted EPS—suggests a path to outperforming peers.

The risks are clear. North American volume weakness, driven by shifting consumer spending and trade policy uncertainty, could persist. Additionally, the Protective segment's turnaround remains non-linear; while the industrial portfolio is growing, the fulfillment segment's churn could drag on margins.

Investment Thesis: A Buy for the Patient

Sealed Air is not a high-growth stock, but it is a reformer with a credible plan. Its CTO2Grow program has delivered tangible cost savings, its debt reduction strategy is on track, and its sustainability initiatives are creating defensible moats. For investors with a 3–5 year horizon, the company's current valuation offers an attractive entry point, particularly if the Protective segment's turnaround accelerates.

However, patience is key. The packaging industry's secular challenges—input cost volatility, regulatory shifts, and margin pressures—will persist. Sealed Air's success hinges on its ability to execute its transformation without sacrificing long-term innovation. For those willing to stomach near-term volatility, the company's strategic clarity and operational discipline make it a compelling case study in industrial reinvention.