Amcor's Bullish H1 Results Clash with DeepValue's Bearish Leverage Concerns

What happened

Amcor reported 14% EPS growth in H1 FY26 and reaffirmed its FY26 guidance, alongside realizing $93 million of its $650 million merger synergy target. A Seeking Alpha article cites these figures to advocate Amcor as a defensive, high-yield dividend aristocrat trading below fair value, emphasizing a 5.4% yield. However, DeepValue's master report highlights severe financial strain, with net debt/EBITDA at 8x and interest coverage of just 2.5x, indicating elevated leverage. Margins have compressed from ~10% in 2023 to ~6.7% in 2025, raising doubts about the sustainability of cash flows despite synergy promises. The stock, while down 18% over 12 months, still trades 58% above a conservative DCF estimate, suggesting the market may be overly optimistic about integration success.

Implication

The high dividend yield may not be sustainable if leverage pressures cash flow or if synergies fail to materialize as planned. DeepValue's analysis indicates that even with reported EPS growth, the stock is overvalued based on intrinsic metrics, limiting upside potential. Regulatory risks and margin compression could further erode profitability, making the current price level risky for new investments. For existing holders, monitoring synergy delivery and deleveraging progress is critical to avoid downside from balance sheet stress. Overall, the investment case hinges on successful execution of integration and portfolio optimization, which remains uncertain given the high stakes.

Thesis delta

The Seeking Alpha article reinforces a bullish thesis centered on dividend safety and synergy-driven growth. However, DeepValue's critical assessment introduces a bearish shift, highlighting that leverage and margin issues could invalidate the growth narrative unless clear evidence of deleveraging and margin repair emerges.