Yahoo Finance Packaging Corp (PKG) Q4 Earnings Beat Estimates, Dip Y/Y
Packaging Corporation of America PKG reported adjusted earnings per share of $2.35 in fourth-quarter 2022, beating the Zacks Consensus Estimate of $2.24 per share. The bottom line decreased 15% year over year. However, it came above the company’s guidance of $2.22 per share.
The decline was driven by lower volumes in the Packaging and Paper segments, higher operating costs, rising freight and logistic expenses, and raised depreciation expenses. Higher converting costs and scheduled maintenance outage expenses affected the results. These headwinds were somewhat offset by rising prices and mix in the
Packaging segment, declining freight and logistics expenses, a reduced share count resulting from share repurchases, and a lower tax rate.
Including special items (primarily for certain costs at the Jackson, AL mill for paper-to-containerboard conversion-related activities), earnings in the reported quarter were $2.31 per share compared with the prior-year quarter’s $2.28 per share.
Operational Update
Sales in the fourth quarter declined 3.2% year over year to $1,978 million and missed the Zacks Consensus Estimate of $2,055 million.
The cost of products sold was down 0.3% year over year to $1,528 million in the fourth quarter. The gross profit declined 11.7% year over year to $450 million.
Selling, general and administrative expenses amounted to $146 million, up from the prior year’s $141 million. The total segment operating income fell 19% year over year to $288 million.
Packaging Corporation of America Price, Consensus and EPS Surprise
Packaging Corporation of America price-consensus-eps-surprise-chart | Packaging Corporation of America Quote
Segmental Performance
Packaging: Sales in the segment decreased 3.8% year over year to $1,809 million in the fourth quarter of 2022. The segment’s adjusted operating profit amounted to $284 million in the reported quarter from $363 million in the prior-year quarter.
Paper: The segment’s revenues were $154 million in the October-December quarter, up 7.7% year over year. The segment reported an adjusted operating profit of $34 million compared with the year-ago quarter’s $21 million.
Cash Position
Packaging Corp had a cash balance of around $470 million at the end of the fourth quarter of 2022, down from $765 million of cash held at the end of the prior-year quarter.
2022 Performance
Packaging Corp reported adjusted earnings per share of $11.14 in 2022 compared with $9.39 reported in the prior year. Earnings beat the Zacks Consensus Estimate of $11.01. Including one-time items, the bottom line was $11.03, up 25% from the $8.83 reported in 2021.
Sales were up 10.4% year over year to $8.5 billion from the prior-year figure of $7.7 billion. The reported figure was in line with the Zacks Consensus Estimate.
Guidance
Packaging Corp projects first-quarter 2023 earnings of $2.23 per share. The company expects its Packaging segment to deliver a higher total volume, with corrugated plants having four additional shipping days. Prices will fall as a result of the recent reductions in published domestic containerboard prices. The company anticipates lower export prices as well.
In the Paper segment, Packaging Corp expects prices to move slightly higher, with fairly flat sales volume.
Price Performance
Packaging Corp’s shares have declined 10% in the past year compared with the industry’s fall of 1.3%.
Image Source: Zacks Investment Research
Zacks Rank and Stocks to Consider
Packaging Corp currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are KnowBe4, Inc. KNBE, O-I Glass, Inc. OI, and Deere & Company DE. KNBE and OI flaunt a Zacks Rank #1 (Strong Buy) at present, and DE has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
KnowBe4’s earnings surprise in the last four quarters was 216.7%, on average. The Zacks Consensus Estimate for the company’s 2022 earnings is pegged at 25 cents, indicating a year-over-year increase of 127.3%. The consensus estimate for 2022 earnings has moved up 25% in the past 60 days. KNBE’s shares have gained 17% in a year.
O-I Glass has an average trailing four-quarter earnings surprise of 14.9%. The Zacks Consensus Estimate for OI’s 2022 earnings is pegged at $2.25 per share. This indicates a 22.9% increase from the prior-year reported figure. The consensus estimate for 2022 earnings has been unchanged in the past 60 days. OI’s shares gained 45.6% in the last year.
The Zacks Consensus Estimate for Deere & Company’s fiscal 2023 earnings per share is pegged at $27.86, suggesting an increase of 19.6% from that reported last year. The consensus estimate for fiscal 2023 earnings moved 2.7% upward in the last 60 days. DE has a trailing four-quarter average earnings surprise of 7.1%. Its shares gained 12% in the last year.
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