Packaging (PKG) AI Stock Analysis

• Market Cap: $16.99B
• Dividend Yield: 2.69%
• Average Volume (3M): 1.06M
• Price to Earnings (P/E): 21.1
• Beta (1Y): 0.64
• Revenue Growth: 9.47%
• EPS Growth: 19.39%
• Country: US
• Employees: 15,400
• Sector: Consumer Cyclical
• Sector Strength: 63
• Industry: Packaging & Containers
• EPS (TTM): 2.47
• Shares Outstanding: 89,928,116
• 10 Day Avg. Volume: 1,127,507
• 30 Day Avg. Volume: 1,057,864
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.08
• Price to Cash Flow (P/CF): 13.40
• P/FCF Ratio: 13.10
• Enterprise Value/Market Cap: 1.31
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 12.45
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $224.60
• Price Target Upside: 22.48% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6

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.

Positive Factors

Financial Growth

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.

Market Expansion

Packaging volume growth and inventory replenishment have led to an 11% increase in EBITDA with strong margins.

Production Capacity

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

Earnings Guidance

PKG's 1Q EPS guidance is below Street expectations, which may lead to a neutral or negative market reaction.

Export Challenges

Exports are softer, notably to China, with a reduction of 1,200 tons a month.

Operating Costs

Rising operating costs and maintenance expenses are weighing on earnings and have led to a sell-off.

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 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.

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.

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.

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

• Technical Analysis Sentiment: Negative
• Last Price: 183.37
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: 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 183.37 is below the 20-day moving average (MA) of 185.74, below the 50-day MA of 195.17, and below the 200-day MA of 211.11, indicating a bearish trend. The MACD of -3.00 indicates Negative momentum. The RSI at 42.13 is Neutral, neither overbought nor oversold. The STOCH value of 54.25 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PKG.

Packaging Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CCK	73 Outperform	$11.24B	20.65	21.30%	1.05%	0.87%	34.41%
PKG	73 Outperform	$16.99B	21.15	19.03%	2.69%	9.47%	19.39%
IP	65 Neutral	$23.17B	27.91	6.74%	4.05%	-1.57%	84.85%
SW	63 Neutral	$21.23B	49.76	13.63%	3.86%	―	―
Sector *	61 Neutral	$6.55B	11.72	3.07%	4.01%	2.66%	-21.27%
AMCR	56 Neutral	$20.81B	16.48	20.60%	5.49%	-3.54%	25.25%
BALL	48 Neutral	$14.46B	―	8.80%	1.54%	-15.64%	-186.66%

Packaging Corporate Events

Packaging Corporation Announces Key Management Changes

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.