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Packaging Corp (PKG) Q1 Earnings & Sales Lag Estimates, Dip Y/Y

Packaging Corporation of America PKG reported adjusted earnings per share (EPS) of $2.20 in the first quarter of 2023, missing the Zacks Consensus Estimate of $2.27. The bottom line decreased 19% year over year.

The downside was primarily driven by lower volumes in the Packaging and Paper segments, higher operating costs, and other elevated costs. These were partially offset by higher price and mix in the Packaging and Paper segments .

Including one-time items, earnings in the reported quarter were $2.11 per share compared with the prior-year quarter’s $2.70 per share.

Operational Update

Sales in the first quarter fell 7.5% year over year to $1,976 million. The top line missed the Zacks Consensus Estimate of $2,082 million.

The cost of products sold was down 3.6% year over year to $1,545 million in the first quarter. The gross profit fell 19.1% year over year to $431 million. Selling, general and administrative expenses amounted to $148 million compared with the prior-year quarter’s $161 million. The adjusted operating income  fell 23% year over year to $264 million.

Packaging Corporation of America Price, Consensus and EPS Surprise

 

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Packaging Corporation of America price-consensus-eps-surprise-chart | Packaging Corporation of America Quote

Segmental Performance

Packaging: Sales in the segment decreased 7.9% year over year to $1,809 million in the first quarter of 2023. The segment’s adjusted operating profit amounted to $268 million in the reported quarter compared with $362 million in the prior-year quarter.

Paper: The segment’s revenues were $151 million in the Jan-Mar quarter, down 1.7% year over year. The segment reported an adjusted operating profit of $34.1 million compared with the year-ago quarter’s $22.4 million.

Cash Position

Packaging Corp had a cash balance of $520 million at the end of the first quarter, down from $778 million of cash held at the end of the prior-year quarter.

Outlook

Packaging Corp projects second-quarter 2023 EPS of $1.96. Pricing is likely to fall as a result of previously announced domestic containerboard price decreases, as well as lower export pricing. Due to weaker demand, sales volume, pricing and mix in the Paper segment are expected to be slightly lower. However, the company anticipates higher volumes in the Packaging segment.

Price Performance

Packaging Corp’s shares have lost 10.7% in the past year compared with the industry’s fall of 3.4%.

 

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

 

Zacks Rank and Stocks to Consider

Packaging Corp currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks from the Industrial Products sector are Worthington Industries, Inc. WOR, The Manitowoc Company, Inc. MTW, and OI Glass Inc. OI. WIRE flaunts a Zacks Rank #1 (Strong Buy) at present, while OI and ITW have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Worthington Industries has an average trailing four-quarter earnings surprise of 27.5%. The Zacks Consensus Estimate for WOR’s fiscal 2023 earnings is pegged at $4.93 per share. The consensus estimate for 2023 earnings has moved north by 17.7% in the past 60 days. Its shares gained 17.3% in the last year.

Manitowoc has an average trailing four-quarter earnings surprise of 38.8%. The Zacks Consensus Estimate for MTW’s 2023 earnings is pegged at 85 cents per share. The consensus estimate for 2023 earnings has moved 63.5% north in the past 60 days. MTW’s shares gained 20% in the last year.

The Zacks Consensus Estimate for OI Glass’ 2023 earnings per share is pegged at $2.59. The consensus estimate for 2023 earnings rose 0.8% in the last 60 days. OI has a trailing four-quarter average earnings surprise of 16.5%. Its shares gained 61.6% in the last year.

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Packaging Corporation of America (PKG) : Free Stock Analysis Report

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