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Valued at $16.5 billion by market cap, Packaging Corporation of America (PKG), based in Lake Forest, Illinois, operates as a leading U.S. producer of containerboard and corrugated packaging. Operating through its Packaging and Paper segments, PKG provides essential products like shipping containers and protective packaging to industries such as food, beverages, and industrial goods.
The packaging giant is expected to announce its first-quarter results after the markets close on Tuesday, Apr. 22. Ahead of the event, analysts expect PKG to deliver adjusted earnings of $2.22 per share, up 29.1% from $1.72 per share reported in the year-ago quarter. While the company has missed the Street’s bottom-line estimates once over the past four quarters, it has surpassed the expectations on three other occasions.
Furthermore, for the full fiscal 2025, PKG’s earnings are expected to grow to $10.62 per share, up a staggering 17.7% from $9.04 per share in fiscal 2024. Moreover, its earnings are expected to further grow 11.3% year-over-year to $11.84 per share in fiscal 2026.
Packaging Corp. has observed a 2.3% dip over the past 52-week period, underperforming the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 2.8% gains and the S&P 500 Index’s ($SPX) 1.4% decline during the same time frame.
Packaging Corp.’s stock prices plunged 9.8% in the trading session after the release of its mixed Q4 results on Jan. 28. Driven by higher volumes and a favorable pricing mix, PKG experienced a notable improvement in realization. Its net sales for the quarter increased 10.7% year-over-year to more than $2.1 billion, exceeding the Street’s expectations. Furthermore, due to a drop in the cost of sales, the company’s gross margins experienced a notable boost. However, the company failed to fully translate these gains because of a significant increase in SG&A and other operating expenses, leading to a much more modest improvement in EBITDA margin. Its non-GAAP EBITDA grew 11.6% year-over-year to $439.3 million. Meanwhile, its non-GAAP EPS of $2.47 missed the consensus estimates by 1.6% which unsettled investor confidence.
Nonetheless, the company's overall financials have remained resilient. The consensus opinion on PKG stock is extremely bullish, with an overall “Strong Buy” rating. Among the eight analysts covering the stock, six recommend “Strong Buy,” while two suggest a “Hold” rating. Its mean price target of $244.12 represents a 33.1% upside potential from current price levels.
