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Packaging (PKG)
NYSE:PKG
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Packaging
(NYSE:PKG)
73Outperform
Positive Factors
Growth Outlook
PKG remains well on track to deliver double-digit profit growth on above-industry volume growth, best in class returns, and net leverage well below the peer group average.
Management Confidence
Management surprisingly conveyed confidence demand is expected to be stronger in the second half compared to the first half, so the second quarter headwinds should fade.
Operational Efficiency
The Glendale, AZ box plant started up ahead of schedule and below budget, which will allow PKG to better serve the market as it was capacity constrained.
Negative Factors
Export Challenges
Exports are softer, notably to China, with a reduction of 1,200 tons a month.
Guidance Concerns
PKG's 1Q EPS guidance is below Street expectations, which may lead to a neutral or negative market reaction.
Rising Costs
Rising operating costs and maintenance expenses are weighing on earnings and have led to a sell-off.
Packaging (PKG) vs. S&P 500 (SPY)
Market Cap
$17.48B
Dividend Yield2.57%
Average Volume (3M)940.72K
Price to Earnings (P/E)20.3
Beta (1Y)0.64
Revenue Growth9.47%
EPS Growth19.37%
CountryUS
Employees15,400
SectorConsumer Cyclical
Sector Strength75
IndustryPackaging & Containers
Share Statistics
EPS (TTM)2.31
Shares Outstanding89,980,000
10 Day Avg. Volume886,059
30 Day Avg. Volume940,716
Financial Highlights & Ratios
PEG Ratio3.47
Price to Book (P/B)3.70
Price to Sales (P/S)0.00
P/FCF Ratio31.39
Enterprise Value/Market Cap1.05
Enterprise Value/Revenue0.57
Enterprise Value/Gross Profit10.32
Enterprise Value/Ebitda2.94
Forecast
1Y Price Target
$219.67Price Target Upside12.98% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Packaging Business Overview & Revenue Model
Company DescriptionPackaging Corporation of America manufactures and sells containerboard and corrugated packaging products in the United States. The company operates through Packaging and Paper segments. The Packaging segment offers various containerboard and corrugated packaging products, such as conventional shipping containers used to protect and transport manufactured goods; multi-color boxes and displays that help to merchandise the packaged product in retail locations; and honeycomb protective packaging products, as well as packaging for meat, fresh fruit and vegetables, processed food, beverages, and other industrial and consumer products. This segment sells its corrugated products through a direct sales and marketing organization, independent brokers, and distribution partners. The Paper segment manufactures and sells commodity and specialty papers, as well as communication papers, including cut-size office papers, and printing and converting papers. This segment sells white papers through its sales and marketing organization. Packaging Corporation of America was founded in 1867 and is headquartered in Lake Forest, Illinois.
How the Company Makes MoneyPackaging Corporation of America generates revenue primarily through the manufacturing and sale of corrugated packaging products and containerboard. The company's key revenue streams include the sale of these products to various industries, such as manufacturing, food and beverage, and e-commerce. PKG's significant partnerships with large-scale retailers and manufacturers also contribute to its earnings by ensuring a steady demand for its packaging solutions. Additionally, the company invests in efficient production processes and sustainable practices, which help in maintaining competitive pricing and attracting environmentally conscious clients.
Packaging Financial Statement Overview
Summary
Strong revenue growth and stable profitability with a robust balance sheet, but potential risks due to absent recent cash flow data.Income Statement
The company has demonstrated strong revenue growth with a 7.44% increase from 2023 to 2024. Gross profit margin is stable at around 21.27%, although there's a slight decline from previous years. Net profit margin improved to 9.61%, indicating efficient cost management. EBIT and EBITDA margins remained robust at approximately 13.14% and 13.14%, respectively, reflecting operational strength.85
Very Positive
Balance Sheet
The company's balance sheet shows a strong equity base with a high equity ratio of 49.86%. Debt-to-equity ratio stands at 0.63, suggesting moderate leverage and financial stability. Return on equity decreased slightly to 18.29%, but remains healthy, indicating efficient use of equity to generate profits.78
Positive
Cash Flow
Free cash flow growth is not calculated due to missing current free cash flow data. Operating cash flow to net income ratio was unavailable for 2024, but previous years indicate strong cash flow generation relative to net income. The lack of reported operating and free cash flow in 2024 presents a risk factor.65
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 8.38B | 7.80B | 8.48B | 7.73B | 6.66B | Gross Profit |
| 1.78B | 1.70B | 2.09B | 1.87B | 1.37B | EBIT |
| 1.10B | 1.08B | 978.40M | 843.60M | 371.50M | EBITDA |
| 1.63B | 1.59B | 1.89B | 1.68B | 1.14B | Net Income Common Stockholders |
| 805.10M | 765.20M | 1.03B | 841.10M | 461.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 787.00M | 1.14B | 405.20M | 704.80M | 1.08B | Total Assets |
| 8.83B | 8.68B | 8.00B | 7.84B | 7.43B | Total Debt |
| 2.77B | 3.17B | 2.79B | 2.73B | 2.74B | Net Debt |
| 2.09B | 2.53B | 2.47B | 2.11B | 1.76B | Total Liabilities |
| 4.43B | 4.68B | 4.34B | 4.23B | 4.19B | Stockholders Equity |
| 4.40B | 4.00B | 3.67B | 3.61B | 3.25B |
| Cash Flow | Free Cash Flow | |||
| 521.50M | 845.40M | 670.80M | 489.00M | 611.60M | Operating Cash Flow |
| 1.19B | 1.32B | 1.50B | 1.09B | 1.03B | Investing Cash Flow |
| -277.80M | -875.10M | -833.70M | -794.40M | -426.10M | Financing Cash Flow |
| -876.40M | -112.00M | -960.00M | -655.60M | -311.60M |
Packaging Technical Analysis
Neutral
194.44
Price Trends
190.30
Positive
204.50
Negative
210.87
Negative
Market Momentum
0.51
Negative
57.88
Neutral
92.82
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PKG, the sentiment is Neutral. The current price of 194.44 is above the 20-day moving average (MA) of 186.50, above the 50-day MA of 190.30, and below the 200-day MA of 210.87, indicating a neutral trend. The MACD of 0.51 indicates Negative momentum. The RSI at 57.88 is Neutral, neither overbought nor oversold. The STOCH value of 92.82 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for PKG.
Packaging Risk Analysis
Packaging disclosed 18 risk factors in its most recent earnings report. Packaging reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Packaging Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $11.58B | 21.37 | 21.30% | 1.01% | 0.90% | 34.40% | |
73 Outperform | $17.48B | 20.33 | 20.07% | 2.57% | 9.47% | 19.37% | |
67 Neutral | $26.47B | 42.75 | 3.01% | 3.69% | 7.49% | 123.95% | |
65 Neutral | $14.92B | 28.53 | 8.23% | 1.49% | -9.79% | ― | |
63 Neutral | $24.14B | 38.18 | 4.25% | 2.22% | ― | ― | |
61 Neutral | $6.97B | 11.38 | 2.88% | 3.90% | 2.64% | -22.07% | |
56 Neutral | $21.76B | 16.94 | 20.71% | 5.35% | -2.29% | 24.05% |
* Consumer Cyclical Sector Average
Performance Comparison
PKG
Packaging
194.44
17.32
9.78%
BALL
Ball
54.33
-14.85
-21.47%
CCK
Crown Holdings
100.15
16.18
19.27%
IP
International Paper Co
50.49
10.83
27.31%
SW
Smurfit Westrock
46.39
-0.68
-1.44%
AMCR
Amcor
9.44
-0.15
-1.56%
Packaging Earnings Call Summary
Earnings Call Date:Apr 22, 2025
(Q1-2025)
| % Change Since: 4.30%|
Next Earnings Date:Jul 28, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong financial performance, including record earnings, revenue, and cash flow. However, ongoing inflationary pressures, economic uncertainties, and operational cost increases were notable challenges. The company is managing these challenges through operational efficiencies and strategic investments.Q1-2025 Updates
Positive Updates
Record First Quarter Earnings
First quarter net income was $204 million or $2.26 per share, excluding special items, it was $208 million or $2.31 per share, compared to $155 million or $1.72 per share in the first quarter of 2024.
Revenue and EBITDA Growth
Net sales increased to $2.1 billion in 2025 from $2 billion in 2024. Total company EBITDA, excluding special items, was $421 million in 2025, up from $333 million in 2024.
Packaging Segment Performance
EBITDA in the Packaging segment was $409 million with a 21% margin, up from $326 million with an 18% margin in the previous year.
Successful Launch of New Box Plant
PCA successfully started up its new high-efficiency box plant in Glendale, Arizona, ahead of schedule and under budget.
Cash Flow Achievements
Record first quarter cash provided by operations totaled $339 million, with free cash flow also setting a record at $191 million.
Negative Updates
Inflationary Pressures
Operating costs increased by $0.37 per share due to ongoing inflation across cost structures, despite lower fiber prices.
Economic Uncertainty and Trade Tensions
Concerns about economic uncertainty and trade tensions are impacting demand and creating cautious behavior among customers.
Paper Segment Volume Decline
Paper segment volume was 7% below the first quarter of 2024, contributing to lower sales.
Increased Costs from Rail and Maintenance
Rail contract rate increases and planned maintenance outages are contributing to higher logistics and operating costs.
Interest and Tax Expenses
Higher tax rate and interest expenses contributed to a decrease in earnings per share.
Company Guidance
During the first quarter of 2025, Packaging Corporation of America (PCA) reported a net income of $204 million or $2.26 per share, with net sales reaching $2.1 billion. When excluding special items, net income was $208 million or $2.31 per share, a notable increase from the previous year's figures of $155 million or $1.72 per share. The company's total EBITDA, excluding special items, was $421 million, up from $333 million in the first quarter of 2024. The strong quarterly performance was attributed to higher prices and mix in both the Packaging and Paper segments, with an increase of $0.78 per share in the Packaging segment. This was further supported by improvements in volume, lower freight and logistics expenses, and reduced scheduled outage costs. Despite facing persistent inflation, PCA managed to offset some of these pressures through operational efficiencies and cost reduction initiatives. The company's guidance for the second quarter anticipates earnings of $2.41 per share, factoring in scheduled maintenance outages and economic uncertainties.Packaging Corporate Events
Executive/Board ChangesShareholder Meetings
Packaging Corporation Approves Key Proposals at Annual Meeting
Neutral
May 12, 2025
On May 7, 2025, Packaging Corporation of America (PCA) conducted its 2025 Annual Meeting of Stockholders, where several key proposals were approved. These included the election of directors, ratification of KPMG LLP as the independent registered public accounting firm, and approval of executive compensation. The outcomes of these votes are likely to influence PCA’s corporate governance and operational strategies moving forward.
The most recent analyst rating on (PKG) stock is a Hold with a $187.00 price target. To see the full list of analyst forecasts on Packaging stock, see the PKG Stock Forecast page.
Spark’s Take on PKG Stock
According to Spark, TipRanks’ AI Analyst, PKG is a Outperform.
The company’s strong revenue and earnings growth, robust balance sheet, and strategic management changes are key strengths. However, risks from absent cash flow data and current negative technical indicators offset these positives.
To see Spark’s full report on PKG stock, click here.
Executive/Board ChangesBusiness Operations and Strategy
Packaging Corporation Announces Key Management Changes
Positive
Feb 28, 2025
On February 26, 2025, Packaging Corporation of America announced significant management changes set to take effect on May 1, 2025. Robert P. Mundy will step down as Chief Financial Officer, transitioning to an advisory role until his retirement in March 2026, with Kent A. Pflederer succeeding him. Additionally, Thomas A. Hassfurther has been appointed President, and D. Ray Shirley will become Executive Vice President of Corrugated Products. These changes are expected to support PCA’s strategic growth and operational excellence, with Hassfurther leading strategic decisions and Shirley managing the corrugated products business.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.