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Packaging Corporation Of America (PKG)
:PKG

Packaging (PKG) AI Stock Analysis

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PK

Packaging

(NYSE:PKG)

Rating:75Outperform
Price Target:
$228.00
▲(12.71%Upside)
Packaging Corporation of America demonstrates strong financial performance and positive strategic initiatives, such as the acquisition of Greif's containerboard business. However, potential risks include cash flow reporting gaps and economic uncertainties. Technical indicators show positive momentum, but the RSI suggests cautious optimism.
Positive Factors
Demand and Growth
PKG's box demand remained strong with bookings and billings up 8% year-over-year, and management is confident of seeing record box shipments.
Financial Strategy
PKG is moving forward with its capital projects and reiterated its capex guidance for 2025, with expectations that capex will decrease in 2026, driving free cash flow growth.
Operational Performance
PKG regularly posts the best volumes and margins in the sector.
Negative Factors
Market Reaction
PKG's 1Q EPS guidance is below Street expectations, which may lead to a neutral or negative market reaction.
Operating Costs
Rising operating costs and maintenance expenses are weighing on earnings and have led to a sell-off.
Weather Impact
Higher than expected operating costs and unusually cold weather have increased costs, contributing to underwhelming guidance.

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:Apr 22, 2025
(Q1-2025)
|
% Change Since: 9.22%|
Next Earnings Date:Jul 23, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong financial performance, including record earnings, revenue, and cash flow. However, ongoing inflationary pressures, economic uncertainties, and operational cost increases were notable challenges. The company is managing these challenges through operational efficiencies and strategic investments.
Q1-2025 Updates
Positive Updates
Record First Quarter Earnings
First quarter net income was $204 million or $2.26 per share, excluding special items, it was $208 million or $2.31 per share, compared to $155 million or $1.72 per share in the first quarter of 2024.
Revenue and EBITDA Growth
Net sales increased to $2.1 billion in 2025 from $2 billion in 2024. Total company EBITDA, excluding special items, was $421 million in 2025, up from $333 million in 2024.
Packaging Segment Performance
EBITDA in the Packaging segment was $409 million with a 21% margin, up from $326 million with an 18% margin in the previous year.
Successful Launch of New Box Plant
PCA successfully started up its new high-efficiency box plant in Glendale, Arizona, ahead of schedule and under budget.
Cash Flow Achievements
Record first quarter cash provided by operations totaled $339 million, with free cash flow also setting a record at $191 million.
Negative Updates
Inflationary Pressures
Operating costs increased by $0.37 per share due to ongoing inflation across cost structures, despite lower fiber prices.
Economic Uncertainty and Trade Tensions
Concerns about economic uncertainty and trade tensions are impacting demand and creating cautious behavior among customers.
Paper Segment Volume Decline
Paper segment volume was 7% below the first quarter of 2024, contributing to lower sales.
Increased Costs from Rail and Maintenance
Rail contract rate increases and planned maintenance outages are contributing to higher logistics and operating costs.
Interest and Tax Expenses
Higher tax rate and interest expenses contributed to a decrease in earnings per share.
Company Guidance
During the first quarter of 2025, Packaging Corporation of America (PCA) reported a net income of $204 million or $2.26 per share, with net sales reaching $2.1 billion. When excluding special items, net income was $208 million or $2.31 per share, a notable increase from the previous year's figures of $155 million or $1.72 per share. The company's total EBITDA, excluding special items, was $421 million, up from $333 million in the first quarter of 2024. The strong quarterly performance was attributed to higher prices and mix in both the Packaging and Paper segments, with an increase of $0.78 per share in the Packaging segment. This was further supported by improvements in volume, lower freight and logistics expenses, and reduced scheduled outage costs. Despite facing persistent inflation, PCA managed to offset some of these pressures through operational efficiencies and cost reduction initiatives. The company's guidance for the second quarter anticipates earnings of $2.41 per share, factoring in scheduled maintenance outages and economic uncertainties.

Packaging Financial Statement Overview

Summary
Strong revenue growth and stable profitability supported by a robust balance sheet. However, the absence of recent cash flow data presents a potential risk in cash management.
Income Statement
85
Very Positive
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
78
Positive
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
65
Positive
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.
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 Price202.29
Price Trends
50DMA
189.31
Positive
100DMA
193.22
Positive
200DMA
208.87
Negative
Market Momentum
MACD
2.08
Negative
RSI
67.61
Neutral
STOCH
90.46
Negative
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 202.29 is above the 20-day moving average (MA) of 191.94, above the 50-day MA of 189.31, and below the 200-day MA of 208.87, indicating a neutral trend. The MACD of 2.08 indicates Negative momentum. The RSI at 67.61 is Neutral, neither overbought nor oversold. The STOCH value of 90.46 is Negative, 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 (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
PKPKG
75
Outperform
$18.20B21.1820.07%2.47%9.47%19.37%
CCCCK
70
Outperform
$12.56B23.1921.30%0.97%0.90%34.40%
69
Neutral
$16.29B31.168.23%1.36%-9.79%
67
Neutral
$22.20B17.2820.71%5.26%-2.29%24.05%
IPIP
63
Neutral
$26.62B43.003.01%3.67%7.49%123.95%
SWSW
63
Neutral
$24.99B39.314.25%3.59%
62
Neutral
$16.85B11.50-7.38%2.96%1.59%-23.36%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
PKG
Packaging
202.29
27.08
15.46%
BALL
Ball
58.73
-0.36
-0.61%
CCK
Crown Holdings
107.90
35.76
49.57%
IP
International Paper Co
50.43
8.79
21.11%
SW
Smurfit Westrock
48.03
3.20
7.14%
AMCR
Amcor
9.63
0.47
5.13%

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 02, 2025