tiprankstipranks
Trending News
More News >
Packaging (PKG)
NYSE:PKG
Advertisement

Packaging (PKG) AI Stock Analysis

Compare
487 Followers

Top Page

PKG

Packaging

(NYSE:PKG)

Rating:77Outperform
Price Target:
$247.00
▲(13.97% Upside)
The overall stock score of 77 reflects strong financial performance and positive earnings call sentiment as the most significant factors. Technical analysis indicates bullish momentum, though valuation suggests potential overvaluation. Strategic acquisitions bolster growth prospects despite some operational challenges.
Positive Factors
Earnings
PKG’s July billings rose +2% Y/Y, likely outperforming the industry as in 1Q (+2.5%) & 2Q (+1.7%).
Market Position
The GEF acquisition raises PKG's recycled mix from ~20% to ~30%, potentially increasing its market share from 12% to 15%.
Operational Efficiency
The Glendale, AZ box plant started up ahead of schedule and below budget, enhancing PKG’s capacity to serve the market.
Negative Factors
Exports
Exports are softer, notably to China, with a reduction of 1,200 tons a month.
Market Competition
High operating rates in the industry have historically attracted new entrants, which could be negative for PKG.

Packaging (PKG) vs. SPDR S&P 500 ETF (SPY)

Packaging Business Overview & Revenue Model

Company DescriptionPackaging (PKG) is a leading provider of innovative packaging solutions, catering to various sectors including food and beverage, consumer goods, and industrial markets. The company specializes in designing and manufacturing sustainable packaging products that enhance product safety, shelf life, and consumer appeal. With a commitment to environmental responsibility, PKG focuses on developing eco-friendly materials and advanced packaging technologies that meet the evolving needs of its customers.
How the Company Makes MoneyPKG generates revenue through multiple streams, primarily by selling its packaging products to a diverse range of industries. Key revenue streams include the sale of custom packaging solutions, stock packaging items, and specialty products tailored to specific client requirements. The company also benefits from long-term contracts with major clients, ensuring a steady income flow. Additionally, PKG engages in strategic partnerships with suppliers and manufacturers to optimize its supply chain and reduce costs, further enhancing profitability. The growing demand for sustainable packaging solutions in response to environmental concerns has also contributed to increased sales, positioning PKG favorably in the market.

Packaging Key Performance Indicators (KPIs)

Any
Any
Assets by Segment
Assets by Segment
Chart Insights
Data provided by:Main Street Data

Packaging Earnings Call Summary

Earnings Call Date:Jul 23, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Oct 27, 2025
Earnings Call Sentiment Positive
The earnings call reflected a generally positive outlook with significant improvements in net income, sales, and EBITDA, alongside successful price increases and strategic acquisitions. However, these were tempered by challenges such as increased operating and outage costs and a decline in export sales due to global trade tensions.
Q2-2025 Updates
Positive Updates
Increased Net Income and Sales
Second quarter net income was $242 million or $2.67 per share, up from $199 million or $2.20 per share in the second quarter of 2024. Second quarter net sales rose to $2.2 billion from $2.1 billion in 2024.
EBITDA Growth
Total company EBITDA, excluding special items, increased to $451 million in the second quarter of 2025 from $404 million in 2024.
Successful Price Increases
Domestic containerboard and corrugated products prices and mix increased, contributing $0.95 per share over the second quarter of 2024.
Strategic Acquisition
Agreement to acquire Greif containerboard business, expected to be completed by the end of the third quarter, offering a growth platform for both containerboard and corrugated products.
Strong Cash Flow
Cash provided by operations was $300 million with a free cash flow of $130 million.
Negative Updates
Higher Operating and Outage Costs
Higher operating costs increased by $0.30 and higher annual outage expenses increased by $0.21, impacting the financial performance.
Export Sales Decline
Export containerboard sales were lower, with a decrease of 30,000 tons from the first quarter of 2025 and down 24,000 tons from the second quarter of 2024.
Impact of Global Trade Tensions
Global trade tensions have negatively affected export sales, particularly with lower sales to China and Europe.
Segment Challenges
Paper segment sales volume was 5% below the second quarter of 2024 and 7% below the first quarter of 2025.
Company Guidance
During the Packaging Corporation of America's second-quarter 2025 earnings call, the company provided detailed guidance, highlighting a strong performance with a reported net income of $242 million or $2.67 per share, surpassing the second-quarter guidance by $0.07 per share. Excluding special items, net income was $224 million or $2.48 per share, marking an increase from the previous year's $199 million or $2.20 per share. The quarter's net sales reached $2.2 billion, with total company EBITDA, excluding special items, at $451 million. The company attributed the $0.28 per share increase compared to the prior year to higher prices and mix in both the Packaging and Paper segments, lower fiber costs, and a reduced tax rate, though these were partially offset by higher operating and outage expenses. For the third quarter, PCA anticipates earnings of $2.80 per share, excluding special items, with higher corrugated shipments and continued lower export sales due to global trade tensions. The company is also optimistic about the strategic acquisition of Greif's containerboard business, expected to complete by the end of the third quarter, which is anticipated to enhance growth and integration capabilities.

Packaging Financial Statement Overview

Summary
The company exhibits strong financial health with consistent revenue and profit growth, efficient operational management, and a stable balance sheet. The cash flow metrics further reinforce the company's ability to generate and manage cash effectively.
Income Statement
85
Very Positive
The company demonstrates strong revenue growth with a TTM increase of 1.12%, supported by a solid gross profit margin of 22.13% and a net profit margin of 10.43%. EBIT and EBITDA margins are healthy at 14.56% and 20.90% respectively, indicating efficient operational management. The consistent revenue growth and robust profitability metrics suggest a well-managed income statement.
Balance Sheet
78
Positive
The balance sheet shows a moderate debt-to-equity ratio of 0.62, reflecting a balanced approach to leveraging. Return on equity is strong at 20.84%, indicating effective use of equity to generate profits. The equity ratio stands at 51.23%, suggesting a stable financial structure. Overall, the balance sheet reflects a solid financial position with manageable leverage.
Cash Flow
80
Positive
The cash flow statement reveals a positive free cash flow growth rate of 18.34% TTM, indicating improved cash generation. The operating cash flow to net income ratio of 1.26 and free cash flow to net income ratio of 0.42 suggest efficient cash conversion. The company maintains strong cash flow metrics, supporting its operational and financial stability.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue8.64B8.38B7.80B8.48B7.73B6.66B
Gross Profit1.91B1.78B1.70B2.09B1.87B1.39B
EBITDA1.79B1.63B1.59B1.89B1.68B1.14B
Net Income904.50M805.10M765.20M1.03B841.10M461.00M
Balance Sheet
Total Assets9.04B8.83B8.68B8.00B7.84B7.43B
Cash, Cash Equivalents and Short-Term Investments880.30M787.00M1.14B405.20M704.80M1.08B
Total Debt2.81B2.77B3.17B2.79B2.73B2.74B
Total Liabilities4.41B4.43B4.68B4.34B4.23B4.19B
Stockholders Equity4.63B4.40B4.00B3.67B3.61B3.25B
Cash Flow
Free Cash Flow625.40M521.50M845.40M670.80M489.00M611.60M
Operating Cash Flow1.29B1.19B1.32B1.50B1.09B1.03B
Investing Cash Flow-241.00M-277.80M-875.10M-833.70M-794.40M-426.10M
Financing Cash Flow-875.90M-876.40M-112.00M-960.00M-655.60M-311.60M

Packaging Technical Analysis

Technical Analysis Sentiment
Positive
Last Price216.72
Price Trends
50DMA
201.80
Positive
100DMA
194.98
Positive
200DMA
205.61
Positive
Market Momentum
MACD
4.87
Negative
RSI
65.49
Neutral
STOCH
76.68
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 216.72 is above the 20-day moving average (MA) of 205.32, above the 50-day MA of 201.80, and above the 200-day MA of 205.61, indicating a bullish trend. The MACD of 4.87 indicates Negative momentum. The RSI at 65.49 is Neutral, neither overbought nor oversold. The STOCH value of 76.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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
77
Outperform
$19.48B21.6020.51%2.31%8.98%25.81%
72
Outperform
$11.49B20.7320.64%1.12%2.07%32.37%
68
Neutral
$13.90B23.849.59%1.59%-3.12%
63
Neutral
$24.52B71.263.85%3.40%
63
Neutral
$19.41B26.306.55%6.11%10.03%-28.33%
61
Neutral
$17.96B13.14-5.29%3.00%1.25%-13.95%
57
Neutral
$25.96B46.41-0.20%3.83%18.13%-106.71%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
PKG
Packaging
216.72
19.79
10.05%
BALL
Ball
50.42
-12.95
-20.44%
CCK
Crown Holdings
92.27
1.89
2.09%
IP
International Paper Co
48.31
2.86
6.29%
SW
Smurfit Westrock
46.17
2.91
6.73%
AMCR
Amcor
8.35
-2.31
-21.67%

Packaging Corporate Events

M&A TransactionsBusiness Operations and Strategy
Packaging Corporation Completes Acquisition of Greif’s Business
Positive
Sep 2, 2025

On August 31, 2025, Packaging Corporation of America (PCA) completed the acquisition of Greif’s containerboard business for approximately $1.8 billion. This strategic acquisition, funded through a combination of cash and new borrowings, expands PCA’s production capacity significantly with the addition of two containerboard mills and eight plants across the U.S., potentially enhancing its market position and operational capabilities.

Private Placements and FinancingM&A Transactions
Packaging Corp Announces $500M Senior Notes Offering
Positive
Aug 15, 2025

On August 11, 2025, Packaging Corporation of America priced a $500 million offering of 5.200% Senior Notes due 2035, with the issuance expected to close on August 15, 2025. The proceeds, estimated at $495.1 million after expenses, will be used to finance the acquisition of Greif, Inc.’s containerboard business. This strategic move aims to enhance the company’s market position, although the acquisition must be completed by June 30, 2026, or the notes will be subject to redemption.

Private Placements and FinancingM&A Transactions
Packaging Corporation Secures $1.6 Billion Credit Agreements
Positive
Aug 6, 2025

On July 31, 2025, Packaging Corporation of America (PCA) entered into two significant credit agreements, the Commercial Credit Agreement and the Farm Credit Agreement, totaling $1.6 billion. These agreements, which include unsecured term loan facilities and a revolving credit facility, are intended to support the company’s acquisition of Greif and replace an older credit agreement. The new credit arrangements are expected to enhance PCA’s financial flexibility and operational capabilities, with loans guaranteed by PCA’s material subsidiaries and subject to customary covenants.

M&A Transactions
Packaging Corp Acquires Greif’s Containerboard Business
Neutral
Jul 3, 2025

On June 30, 2025, Packaging Corporation of America entered into a definitive agreement to acquire the containerboard business of Greif, Inc. for $1.8 billion in cash. This acquisition, expected to close in the third quarter of 2025, is subject to customary conditions and regulatory approvals, and includes provisions for termination rights and indemnification, potentially impacting PCA’s market positioning and operational capabilities.

Private Placements and FinancingM&A TransactionsBusiness Operations and Strategy
Packaging Corporation Acquires Greif’s Containerboard Business
Positive
Jul 1, 2025

On July 1, 2025, Packaging Corporation of America announced its agreement to acquire the containerboard business of Greif, Inc. for $1.8 billion in cash. The acquisition, expected to close by the end of PCA’s third quarter, includes two containerboard mills and eight sheet feeder and corrugated plants across the U.S., which generated $1.2 billion in sales over the last 12 months. The deal is anticipated to bring $60 million in pre-tax synergies through operational efficiencies and increased integration, enhancing PCA’s growth strategy and shareholder value. The acquisition will be financed with $1.5 billion in new debt and cash, and is expected to be immediately accretive to earnings, with PCA’s pro forma leverage ratio estimated at 1.7X post-transaction.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Sep 03, 2025