Packaging (PKG) AI Stock Analysis

• Market Cap: $20.59B
• Dividend Yield: 2.42%
• Average Volume (3M): 1.10M
• Price to Earnings (P/E): 26.7
• Beta (1Y): 0.67
• Revenue Growth: 7.23%
• EPS Growth: -3.88%
• Country: US
• Employees: 15,400
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Packaging & Containers
• EPS (TTM): 2.32
• Shares Outstanding: 89,977,066
• 10 Day Avg. Volume: 1,037,865
• 30 Day Avg. Volume: 1,102,693
• PEG Ratio: -6.02
• Price to Book (P/B): 4.04
• Price to Sales (P/S): 2.07
• P/FCF Ratio: 25.49
• Enterprise Value/Market Cap: 1.20
• Enterprise Value/Revenue: 2.75
• Enterprise Value/Gross Profit: 13.08
• Enterprise Value/Ebitda: 14.05
• 1Y Price Target: $243.20
• Price Target Upside: 4.76% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): 10.85
• Revenue Forecast (FY): $10.22B

• Rating: 69 Neutral
• Price Target: $254.00 ▲(9.42% Upside)
• Action: Downgraded Date: 02/27/26
• Date: Action: Downgraded 02/27/26

PKG scores as stable-to-attractive primarily on solid operating performance and cash generation, reinforced by a constructive earnings outlook (pricing actions, improving demand signals, and integration progress). The score is held back by higher leverage, near-term cost/outage and high-capex headwinds, and a somewhat elevated P/E despite a moderate dividend yield.

Positive Factors

Strong cash generation

Sustained operating cash flow (~$1.56B) and a materially recovered FCF (~$729M) provide durable internal funding for capital investment, dividends and share repurchases. This cash generation reduces reliance on external financing and supports execution of multi-year projects and integration synergies.

Pricing power and improving demand

A sizable March price increase and sequentially stronger bookings signal structural pricing power in a tight containerboard market. That ability to pass through cost inflation and capture improving demand supports margin resilience and revenue growth over the coming quarters.

Successful Greif integration

Measured ~15% efficiency gains at acquired mills and faster-than-expected integration indicate tangible operational synergies. Improved reliability and higher throughput from acquisitions are durable contributors to margin expansion and incremental EBITDA as integration gains become run-rate benefits.

Negative Factors

Elevated leverage

Rising debt and a near-1.0 debt-to-equity ratio materially reduce financial flexibility, increasing sensitivity to cash flow volatility. Elevated leverage constrains the company's ability to fund opportunistic investments or absorb shocks without either raising additional capital or cutting distributions.

High capex and planned outage costs

Sustained high capital intensity and sizable planned outage costs require significant near-term cash and depress reported earnings. Over a multi-quarter horizon this increases the burden on FCF conversion and forces careful prioritization between maintenance capex, growth projects and shareholder returns.

Inventory and working-capital mismatch at acquired mills

Elevated inventories at acquired operations tie up liquidity and signal integration or demand-forecasting frictions. Persistently higher working capital raises financing needs and risks margin dilution from markdowns or higher storage/transport costs until inventories normalize.

Packaging Business Overview & Revenue Model

Company Description

Packaging 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 Money

Packaging generates revenue primarily through the sale of its packaging products to businesses across multiple sectors. The company operates on a B2B model, supplying packaging solutions to manufacturers and retailers who require specialized packaging for their goods. Key revenue streams include direct sales of packaging products, custom packaging design services, and long-term contracts with clients for ongoing supply. Additionally, PKG benefits from strategic partnerships with raw material suppliers and logistics companies, which help to streamline operations and reduce costs. The increasing demand for sustainable packaging solutions has also positioned PKG to capture market share, as more companies seek eco-friendly alternatives in response to consumer preferences and regulatory pressures.

Packaging Financial Statement Overview

Summary

Financials are stable-to-constructive: revenue returned to growth and profitability remains solid (2025 net margin ~8.6%), while operating cash flow is strong and improved (2025 OCF ~$1.56B) with a meaningful free-cash-flow rebound (~$729M). The main drag is higher leverage, with debt rising to ~$4.36B and debt-to-equity increasing to ~0.95, reducing flexibility versus the prior year.

Income Statement

Revenue has recovered since 2023 and reached $9.0B in 2025 (+2.5% YoY), indicating steady demand, but growth has been modest overall. Profitability remains solid for the industry (2025 gross margin ~21% and net margin ~8.6%), yet margins and earnings are below the stronger 2021–2022 period (when net margin was ~10.9%–12.1%). Net income also dipped slightly in 2025 versus 2024 despite higher revenue, suggesting some cost or pricing pressure.

Balance Sheet

The balance sheet is reasonably supported by equity (2025 equity ~$4.6B), and returns on equity remain healthy (~16.7% in 2025), though down from the 2021–2022 peak. The main concern is leverage: total debt rose to ~$4.36B in 2025 and debt-to-equity increased to ~0.95 (up from ~0.63 in 2024), reducing financial flexibility versus recent years.

Cash Flow

Cash generation is a clear strength: operating cash flow improved to ~$1.56B in 2025 and comfortably covers accounting earnings (operating cash flow to net income ~1.53). Free cash flow rebounded strongly in 2025 to ~$729M (+48% YoY), but free cash flow remains less than half of net income (~0.47), indicating ongoing cash needs (e.g., capital spending) that limit conversion of profits into excess cash.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	8.99B	8.38B	7.80B	8.48B	7.73B
Gross Profit	1.89B	1.78B	1.70B	2.09B	1.87B
EBITDA	1.76B	1.63B	1.59B	1.89B	1.68B
Net Income	768.90M	805.10M	765.20M	1.03B	841.10M
Balance Sheet
Total Assets	10.73B	8.83B	8.68B	8.00B	7.84B
Cash, Cash Equivalents and Short-Term Investments	600.80M	787.00M	1.14B	405.20M	704.80M
Total Debt	4.36B	2.77B	3.17B	2.79B	2.73B
Total Liabilities	5.11B	4.43B	4.68B	4.34B	4.23B
Stockholders Equity	4.60B	4.40B	4.00B	3.67B	3.61B
Cash Flow
Free Cash Flow	728.60M	521.50M	845.40M	670.80M	489.00M
Operating Cash Flow	1.56B	1.19B	1.32B	1.50B	1.09B
Investing Cash Flow	-2.57B	-277.80M	-875.10M	-833.70M	-794.40M
Financing Cash Flow	859.40M	-876.40M	-112.00M	-960.00M	-655.60M

Packaging Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 232.14
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PKG, the sentiment is Positive. The current price of 232.14 is below the 20-day moving average (MA) of 234.76, above the 50-day MA of 221.97, and above the 200-day MA of 205.28, indicating a neutral trend. The MACD of 2.83 indicates Positive momentum. The RSI at 52.53 is Neutral, neither overbought nor oversold. The STOCH value of 44.74 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PKG.

Packaging Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CCK	71 Outperform	$13.36B	18.16	25.61%	1.01%	2.94%	893.70%
PKG	69 Neutral	$20.59B	26.67	―	2.42%	7.23%	-3.88%
SW	68 Neutral	$23.89B	34.25	3.92%	4.21%	―	―
BALL	66 Neutral	$17.70B	19.94	16.17%	1.53%	2.87%	―
AMCR	64 Neutral	$23.19B	32.81	7.73%	6.20%	28.41%	-35.50%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
IP	49 Neutral	$23.24B	-6.51	-24.51%	4.69%	33.71%	-517.99%

Packaging Corporate Events

PCA Discusses Q3 2025 Performance and Future Plans

On December 10 and 11, 2025, PCA’s executives met with analysts and investors to discuss the company’s performance and future plans. PCA reported a 6% increase in net sales for Q3 2025 compared to the previous year, with a notable increase in EBITDA. The company is integrating the recently acquired Greif business, which has exceeded performance expectations, and is undergoing a reconfiguration of its Wallula mill to achieve significant cost savings. PCA continues to focus on strategic growth and capital investment, supported by strong cash flow and a disciplined capital structure.

The most recent analyst rating on (PKG) stock is a Buy with a $220.00 price target. To see the full list of analyst forecasts on Packaging stock, see the PKG Stock Forecast page.

Packaging Corporation Announces Wallula Mill Reconfiguration

On December 3, 2025, Packaging Corporation of America announced plans to permanently shut down the No. 2 paper machine and kraft pulping facilities at its Wallula, Washington containerboard mill, while continuing operations of the No. 3 paper machine and recycled pulping facilities. This reconfiguration, expected to be completed by the end of the first quarter of 2026, will result in a reduction of 250,000 tons of annual production capacity and a headcount reduction of approximately 200 positions. The company anticipates pre-tax restructuring charges of $205 million, with significant cost savings expected from improved production efficiency and a shift to lower-cost facilities. This strategic move aims to enhance PCA’s competitiveness amid rising costs, ensuring the mill’s future viability and supporting continued growth with customers.

The most recent analyst rating on (PKG) stock is a Buy with a $240.00 price target. To see the full list of analyst forecasts on Packaging stock, see the PKG Stock Forecast page.