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Lake Forest, Illinois-based Packaging Corporation of America (PKG) manufactures and sells containerboard and corrugated packaging products. Valued at a market cap of $22.2 billion, the company is a leading producer of uncoated freesheet paper in North America and operates mills and corrugated products plants and related facilities.
Shares of this packaging company have significantly outperformed the broader market over the past 52 weeks. PKG has rallied 55.7% over this time frame, while the broader S&P 500 Index ($SPX) has gained 31.8%. Moreover, on a YTD basis, the stock is up 51.6%, compared to SPX’s 25.8% gains.
Narrowing the focus, PKG’s outperformance looks even more pronounced when compared to the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 30.6% gain over the past 52 weeks and 23.1% return on a YTD basis.
Shares of PKG rose 5.5% after its strong Q3 earnings release on Oct. 22. Its revenue increased 12.4% year-over-year to $2.18 billion and surpassed the Wall Street estimates of $2.09 billion. Moreover, its adjusted EPS of $2.64 grew 29.3% from a year ago and outpaced the consensus estimates of $2.50 per share. PKG’s robust performance can be primarily attributed to significant growth in its packaging segment sales, mainly fueled by higher volumes. Lower freight and logistics expenses further aided the company.
For the current fiscal year, ending in December, analysts expect PKG’s EPS to grow nearly 4.3% year over year to $9.07. The company’s earnings surprise history is promising. It surpassed the consensus estimates in each of the last four quarters.
Among the 10 analysts covering the stock, the consensus rating is a “Moderate Buy,” which is based on four “Strong Buy” and four “Hold” ratings.
On Oct. 25, Truist maintained a “Buy” rating on PKG and raised its price target to $252, which indicates a slight 2% upside potential from the current levels.
The Street-high price target of $271 suggests a modest upside potential of 9.7%. As of writing, the company is trading above its mean price target of $232.57
