Packaging Corporation of America Surges with Strong Earnings Reports
Lake Forest, Illinois-based Packaging Corporation of America (PKG) manufactures and sells containerboard and corrugated packaging products. Valued at a market cap of $22.2 billion, the company is a leading producer of uncoated freesheet paper in North America and operates mills and corrugated products plants and related facilities.
Impressive Stock Performance Outshines the Market
Shares of Packaging Corporation of America have significantly outperformed the broader market over the past 52 weeks. PKG has rallied 55.7% during this period, while the S&P 500 Index ($SPX) has gained 31.8%. Moreover, on a year-to-date (YTD) basis, the stock is up 51.6%, compared to SPX’s 25.8% gains.
PKG Outperforms Sector Rivals
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 a strong Q3 earnings release on October 22. Revenue increased 12.4% year-over-year to $2.18 billion, surpassing Wall Street estimates of $2.09 billion. Additionally, adjusted earnings per share (EPS) of $2.64 grew 29.3% from the previous year, exceeding the consensus estimates of $2.50 per share. The company’s robust performance can be primarily attributed to significant growth in packaging segment sales, mainly driven by higher volumes. Lower freight and logistics expenses also benefited the company.
Positive Earnings Outlook for FY2023
For the current fiscal year ending December, analysts expect PKG’s EPS to grow nearly 4.3% year-over-year to $9.07. Impressively, the company has a history of exceeding consensus estimates in each of the last four quarters.
Analysts Show Confidence in PKG’s Future
Among the ten analysts covering the stock, the consensus rating is a “Moderate Buy,” based on four “Strong Buy” and four “Hold” ratings.
Truist Maintains Buy Rating With Increased Price Target
On October 25, Truist maintained a “Buy” rating on PKG and raised its price target to $252, indicating a slight 2% upside potential from current levels.
Potential for Further Growth
The Street-high price target of $271 suggests a modest upside potential of 9.7%. As of now, the company is trading above its mean price target of $232.57.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
