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Packaging Corporation Of America (PKG)
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Packaging (PKG) AI Stock Analysis

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PKG

Packaging

(NYSE:PKG)

Rating:80Outperform
Price Target:
$237.00
▲(14.75%Upside)
The overall stock score of 80 reflects strong financial performance, positive technical trends, and strategic growth initiatives. The company's robust revenue growth and effective cash flow management are key strengths. Additionally, the strategic acquisition of Greif's containerboard business adds to growth prospects. The valuation is fair, and despite some operational challenges, the company's positive outlook and strategic initiatives support its stable position in the Packaging & Containers industry.
Positive Factors
Acquisition Impact
Following the GEF acquisition, PKG’s recycled mix will increase from ~20% to ~30%, enhancing its market position.
Market Growth
E-commerce remains the fastest growing end market with healthy volumes, and PKG continues to generate solid margins due to its low-cost network.
Operational Efficiency
The Glendale, AZ box plant started up ahead of schedule and below budget, allowing PKG to better serve the market.
Negative Factors
Competition Risk
High operating rates in the industry have historically attracted new entrants, which could be negative for PKG.
Export Challenges
Exports are softer, notably to China, with a reduction of 1,200 tons a month.
Rising Costs
Rising operating costs and maintenance expenses are weighing on earnings and have led to a sell-off.

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

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 through the manufacturing and sale of its containerboard and corrugated products. The company operates a network of mills and facilities that produce containerboard, which is then converted into corrugated packaging products. These products are sold directly to businesses across various industries, ensuring a steady demand for packaging solutions. Additionally, PKG benefits from its ability to offer customized packaging solutions, which allows it to serve niche markets and provide value-added services. Strategic partnerships with suppliers and distributors further enhance its market reach, supporting consistent revenue growth. The company's focus on sustainability and innovation also positions it favorably in an increasingly eco-conscious market, contributing to its financial success.

Packaging Earnings Call Summary

Earnings Call Date:Jul 23, 2025
(Q2-2025)
|
% Change Since: 0.10%|
Next Earnings Date:Oct 27, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance with increased net income and successful price increases. The strategic acquisition of Greif containerboard business is expected to provide growth opportunities. However, challenges such as higher operating costs, lower production volumes, and global trade tensions were noted. Despite these issues, the company maintains a positive outlook, driven by operational efficiency and strategic initiatives.
Q2-2025 Updates
Positive Updates
Increased Net Income and Earnings Per Share
Second quarter 2025 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.
Growth in Packaging Segment
Packaging segment saw higher prices and mix, contributing $0.98 per share to earnings compared to the second quarter of 2024.
Successful Price Increases
Full realization of earlier announced price increases contributed to improved margins and higher EBITDA per ton.
Strategic Acquisition of Greif Containerboard Business
Announced an agreement to acquire Greif containerboard business, expected to provide a good growth platform and capital avoidance opportunities.
Strong Cash Flow
Cash provided by operations was $300 million, with free cash flow at $130 million.
Improved Operational Efficiency
Achieved high efficiency with approximately 99% uptime performance across the system.
Negative Updates
Higher Operating Costs and Expenses
Higher operating costs of $0.30 per share and higher annual outage expenses of $0.21 negatively impacted earnings.
Lower Production and Sales Volumes
Lower production and export sales volume in the Packaging segment impacted earnings by $0.13 per share.
Decreased Paper Segment Sales Volume
Paper segment sales volume was 5% below the second quarter of 2024 and 7% below the first quarter of 2025.
Challenges with Export Sales
Lower export sales due to global trade tensions, particularly affecting sales to China and Europe.
Impact of Global Economic Uncertainty
Customer ordering patterns remain cautious due to global economic uncertainties and tariffs.
Company Guidance
In the Packaging Corporation of America's second quarter 2025 earnings call, the company reported a net income of $242 million, or $2.67 per share, with net sales of $2.2 billion. Excluding special items, net income was $224 million, or $2.48 per share, compared to $199 million, or $2.20 per share, in the same period in 2024. The company's EBITDA for the quarter, excluding special items, was $451 million, reflecting an increase from $404 million in the previous year. Key factors contributing to the earnings increase included higher prices and mix in the Packaging segment, lower fiber costs, and a lower tax rate. These gains were partially offset by higher operating costs and annual outage expenses. The Packaging segment achieved an EBITDA margin of 22.6% on sales of $2 billion, and the Paper segment recorded an EBITDA margin of 20.8% on sales of $146 million. The firm's guidance for the third quarter anticipates earnings of $2.80 per share, with expectations for higher corrugated shipments and flat pricing in the Packaging segment. The company is also in the process of acquiring Greif's containerboard business, which is expected to enhance growth opportunities.

Packaging Financial Statement Overview

Summary
Packaging has demonstrated strong financial performance across all verticals, with robust revenue growth, stable profitability, and effective cash flow management. The company maintains a solid balance sheet with manageable debt levels, supporting its long-term financial health. While leverage is slightly higher, the overall financial health remains strong, positioning the company well for future growth and stability in the Packaging & Containers industry.
Income Statement
85
Very Positive
The company has demonstrated strong revenue growth, with a significant increase from the previous years. The gross profit margin and EBIT margin indicate healthy profitability, while net profit margin remains stable. Overall, the income statement reflects robust growth and profitability metrics, highlighting effective cost management and revenue expansion.
Balance Sheet
78
Positive
The balance sheet shows a solid equity foundation with a healthy equity ratio. The debt-to-equity ratio is reasonable, indicating manageable leverage. Return on equity is strong, suggesting effective use of equity capital. However, the slight increase in total debt warrants monitoring.
Cash Flow
82
Very Positive
The company exhibits solid cash flow performance, with consistent free cash flow generation and a positive operating cash flow to net income ratio. Free cash flow growth is stable, reflecting effective cash management and reinvestment strategies. Overall, cash flow metrics indicate a strong ability to generate cash and sustain operations.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue8.38B7.80B8.48B7.73B6.66B
Gross Profit1.78B1.70B2.09B1.87B1.37B
EBITDA1.63B1.59B1.89B1.68B1.14B
Net Income805.10M765.20M1.03B841.10M461.00M
Balance Sheet
Total Assets8.83B8.68B8.00B7.84B7.43B
Cash, Cash Equivalents and Short-Term Investments787.00M1.14B405.20M704.80M1.08B
Total Debt2.77B3.17B2.79B2.73B2.74B
Total Liabilities4.43B4.68B4.34B4.23B4.19B
Stockholders Equity4.40B4.00B3.67B3.61B3.25B
Cash Flow
Free Cash Flow521.50M845.40M670.80M489.00M611.60M
Operating Cash Flow1.19B1.32B1.50B1.09B1.03B
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

Technical Analysis Sentiment
Positive
Last Price206.53
Price Trends
50DMA
195.31
Positive
100DMA
192.60
Positive
200DMA
208.37
Negative
Market Momentum
MACD
3.28
Negative
RSI
63.11
Neutral
STOCH
65.15
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 206.53 is above the 20-day moving average (MA) of 201.96, above the 50-day MA of 195.31, and below the 200-day MA of 208.37, indicating a neutral trend. The MACD of 3.28 indicates Negative momentum. The RSI at 63.11 is Neutral, neither overbought nor oversold. The STOCH value of 65.15 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 (65)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
80
Outperform
$18.53B20.5520.07%2.42%8.98%25.73%
74
Outperform
$12.13B21.8920.60%0.99%2.13%32.36%
69
Neutral
$16.35B31.278.23%1.36%-9.79%
67
Neutral
$22.50B17.5120.71%5.20%-2.29%24.05%
66
Neutral
$28.93B46.123.01%3.32%7.49%123.95%
65
Neutral
€19.74B9.827.83%3.19%0.64%-38.42%
63
Neutral
$24.99B39.314.25%0.06%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
PKG
Packaging
206.53
12.93
6.68%
BALL
Ball
59.01
-3.36
-5.39%
CCK
Crown Holdings
102.98
17.16
20.00%
IP
International Paper Co
55.68
10.70
23.79%
AMCR
Amcor
9.74
-0.17
-1.72%
SW
Smurfit Westrock
48.85
2.73
5.92%

Packaging Corporate Events

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.

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.

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.

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.

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.

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: Jul 25, 2025