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Packaging (PKG)
NYSE:PKG
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Packaging
(NYSE:PKG)71Outperform
Positive Factors
Earnings
PKG posted Q3 EPS results above the Street (+6.4%), with Q4 guide in line with cons.
Volume Growth
PKG's 11.1% same-day shipments in Q3 solidifies its position in a league of its own, driven by a honed commercial and operational strategy.
Negative Factors
Operating 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
$19.14B
Dividend Yield2.39%
Average Volume (3M)923.87K
Price to Earnings (P/E)23.9
Beta (1Y)0.68
Revenue Growth7.45%
EPS Growth5.43%
CountryUS
Employees14,900
SectorConsumer Cyclical
Sector Strength53
IndustryContainers & Packaging
Share Statistics
EPS (TTM)8.93
Shares Outstanding89,801,220
10 Day Avg. Volume763,000
30 Day Avg. Volume923,874
Financial Highlights & Ratios
PEG Ratio4.40
Price to Book (P/B)N/A
Price to Sales (P/S)2.34
Price to Cash Flow (P/CF)14.60
P/FCF Ratio25.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$246.80Price Target Upside22.02% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
Packaging Business Overview & Revenue Model
Company DescriptionPackaging Corp. of America engages in the production of container products. It operates through the following segments: Packaging, Paper, and Corporate and Other. The Packaging segment offers a variety of corrugated packaging products, such as conventional shipping containers. The Paper segment manufactures and sells a range of papers, including communication-based papers, and pressure sensitive papers. The Corporate and Other segment focuses on transportation assets, as well as rail cars, and trucks. The company was founded in 1959 and is headquartered in Lake Forest, IL.
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. However, the absence of recent cash flow data presents a risk factor in cash management.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 |
| 1.10B | 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
Negative
202.27
Price Trends
221.46
Negative
226.99
Negative
209.72
Negative
Market Momentum
-3.93
Negative
31.81
Neutral
37.10
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PKG, the sentiment is Negative. The current price of 202.27 is below the 20-day moving average (MA) of 210.16, below the 50-day MA of 221.46, and below the 200-day MA of 209.72, indicating a bearish trend. The MACD of -3.93 indicates Negative momentum. The RSI at 31.81 is Neutral, neither overbought nor oversold. The STOCH value of 37.10 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $26.99B | 32.62 | 6.82% | 3.34% | -1.57% | 84.85% | |
71 Outperform | $19.14B | 23.85 | 18.28% | 2.39% | 7.45% | 5.43% | |
68 Neutral | $4.70B | 28.96 | 7.22% | 4.40% | -6.93% | -65.66% | |
67 Neutral | $4.98B | 18.52 | 42.39% | 2.45% | -1.75% | -21.15% | |
65 Neutral | $8.01B | 12.37 | 21.85% | 1.50% | -6.59% | -7.81% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% | |
43 Neutral | $14.90B | ― | 67.59% | 1.53% | -15.64% | -186.66% |
* Consumer Cyclical Sector Average
Performance Comparison
PKG
Packaging
202.27
23.47
13.13%
BALL
Ball
51.03
-12.20
-19.29%
GPK
Graphic Packaging
25.83
0.14
0.54%
IP
International Paper Co
51.30
16.91
49.17%
SEE
Sealed Air
31.03
-3.74
-10.76%
SON
Sonoco Products
46.27
-8.03
-14.79%
Packaging Earnings Call Summary
Earnings Call Date: Jan 28, 2025 | % Change Since: -15.16% | Next Earnings Date: Apr 28, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted significant achievements in revenue growth and operational excellence, particularly in the Packaging segment. However, the company faces challenges with inflation, cost management, and external pricing indices. Weather-related disruptions also added to operational costs.Highlights
Record Quarterly and Annual Sales
Fourth quarter sales reached a record $1 billion, with annual sales totaling $8.4 billion, compared to $7.8 billion in 2023. The packaging segment achieved record-breaking shipment volumes and daily shipment records.
Earnings Growth
Fourth quarter net income, excluding special items, increased to $222 million or $2.47 per share from $192 million or $2.13 per share in 2023. Full-year earnings rose to $814 million or $9.04 per share from $784 million or $8.70 per share in 2023.
Robust Packaging Segment Performance
The Packaging segment achieved a fourth-quarter EBITDA of $426 million with sales nearing $2 billion, maintaining a 22% margin. Full-year EBITDA was $6 billion with a 21% margin.
Strong Cash Flow and Liquidity
Cash provided by operations was $325 million for the quarter and $1.2 billion for the year, with a year-end cash balance of $852 million and liquidity of $1.2 billion.
Lowlights
Inflation and Operating Cost Challenges
Higher operating costs increased by $0.48 per share due to inflation, impacting cost structure significantly. Scheduled maintenance and depreciation expenses also increased.
Frustration with RISI Pricing Index
The company expressed frustration with the RISI Pulp and Paper Week publication not recognizing industry-wide price increases, impacting contract pricing strategies.
Weather-Related Operational Challenges
Severe weather conditions in January led to increased costs and some volume impact, particularly affecting energy usage and raw material consumption.
Company Guidance
In the fourth quarter of 2024, Packaging Corporation of America reported a net income of $221 million, or $2.45 per share, with net sales hitting a record $1 billion. Excluding special items, the net income was $222 million, or $2.47 per share, compared to $192 million, or $2.13 per share, in the fourth quarter of 2023. Total company EBITDA, excluding special items, was $439 million, an increase from $394 million in the prior year. For the full year 2024, PCA's earnings were $814 million, or $9.04 per share, with net sales of $8.4 billion. The company maintained a total company EBITDA of $1.6 billion, matching the previous year. The fourth quarter earnings increase of $0.34 per share from 2023 was attributed to higher prices and mix in both the Packaging and Paper segments and lower freight and logistics expenses, though these gains were partially offset by higher operating costs due to inflation. PCA met its guidance for the quarter, reflecting strong demand and operational excellence, particularly in its Packaging business, which achieved record sales and shipments.Packaging Corporate Events
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.