Is Orora (ASX:ORA) Undervalued Following Its FTSE All World Index Removal?

Orora (ASX:ORA) has been removed from the FTSE All-World Index in USD terms, a move that can influence index fund ownership, trading liquidity, and how global investors track the packaging group.

Recent trading has been heavy for Orora, with the share price at A$1.365 and a 30-day share price return down 7.77% and the year-to-date share price return lower by 38.51% as the index removal adds another headwind. Over a longer window, the 1-year total shareholder return is down 29.97% and the 3-year total shareholder return has declined 42.91%. This points to fading momentum as investors reassess both growth prospects and risk around the packaging group.

Scan beyond Orora and see how other packaging and materials stocks are trading by reviewing our hand picked 5 high quality undervalued stocks, which combines quality fundamentals with compressed valuations.

Orora now trades under the weight of index selling, a sharp share price slide and a recent loss. Does that reset create a skewed opportunity for new buyers, or does it signal that risk still dominates the equation?

Most Popular Narrative: 19% Undervalued

On Simply Wall St’s most followed narrative, Orora screens as undervalued, with a fair value of A$1.69 against the last close of A$1.37. This puts the recent share slide and index removal in a different light for long term investors.

With major capital expenditure cycles concluding, the business is set to enter a period of substantially higher free cash flow. Share buybacks (targeting up to 10%) and a robust balance sheet can drive EPS growth and provide support for shareholder returns while maintaining flexibility for future industry consolidation opportunities. (Impacts: earnings per share, free cash flow, shareholder returns)

See why 26 investors see Orora as 19% undervalued.

That storyline is built on a discounted cash flow framework using a 7.28% discount rate and a fair value estimate of A$1.69 per share, about 19% above where Orora last traded at A$1.37. The model projects future earnings and cash generation based on analyst assumptions for modest revenue expansion, slightly higher margins and a higher future P/E multiple on expected 2029 earnings, then discounts those cash flows back to today using that required return.

The same thesis leans heavily on packaging themes such as demand for recyclable materials, capacity consolidation in glass and earnings uplift once a heavy investment phase rolls off. It also flags meaningful risks around tariffs, softer premium beverages demand and underutilised assets if sector volumes disappoint. For anyone weighing the recent share price fall against that narrative, the key judgement is whether those cash flow and P/E assumptions feel realistic given Orora’s current loss, 3.1% annual revenue growth rate and the pressure already visible in returns and dividend cover.

Result: Fair Value of A$1.69 (UNDERVALUED)

Still, the narrative leans heavily on demand for premium glass and aluminum packaging. Any prolonged weakness or tariff shock could quickly undercut those margin and cash flow assumptions.

Find out about the key risks to this Orora narrative.

Next Steps

The narrative around Orora is mixed, with sharp share price pressure on one side and a potential value gap on the other. If you want to move quickly and form an independent view grounded in the underlying numbers and sentiment, start by weighing the 3 key rewards and 1 important warning sign.

Looking for more Orora investment ideas?

If Orora has sharpened your focus on valuation and risk, do not stop here. Use the Simply Wall St screener to surface fresh opportunities tailored to your style.

• Target potential mispricings by scanning companies that combine strong fundamentals with compressed valuations through the 5 high quality undervalued stocks.
• Strengthen your income stream by focusing on companies with reliable payouts and higher yields using the 3 dividend fortresses.
• Dial down portfolio stress by filtering for companies with resilient balance sheets and solid fundamentals in the list of solid balance sheet and fundamentals (12 results).

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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