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What's in Store for Packaging Corp's (PKG) Q4 Earnings?

Packaging Corporation of America PKG is set to release fourth-quarter 2022 results on Jan 25, after the closing bell.

Q3 Results

In the last reported quarter, Packaging Corp’s earnings were in line with the Zacks Consensus Estimate and increased year over year. Revenues rose on a year-over-year basis but missed the Zacks Consensus Estimate.
PKG has a trailing four-quarter earnings surprise of 13.2%, on average.

Packaging Corporation of America Price and EPS Surprise

 

Packaging Corporation of America Price and EPS Surprise
Packaging Corporation of America Price and EPS Surprise

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

Q4 Estimates

The Zacks Consensus Estimate for Packaging Corp’s fourth-quarter earnings per share is pegged at $2.24, suggesting a decline of 18.8% from the prior-year quarter’s reported level.

The Zacks Consensus Estimate for total sales is pinned at $2.05 billion, indicating a 0.6% rise from the year-ago quarter’s reported number.

Factors at Play

Packaging Corporation’s fourth-quarter results are expected to reflect the impacts of the weakness in packaging demand as global and domestic economic conditions have been unfavorable due to ongoing inflationary pressures, high interest rates, and supply-chain disruptions. Customers have been working to reduce their high inventory levels, which has been affecting order flow and demand for PKG’s products.

Given that packaging products are essential for the distribution of food, beverage and pharmaceutical products, the demand for these products and growth in e-commerce activities are likely to have aided the performance of the packaging segment. The segment generates around 91% of PKG's revenues.

The fourth quarter had four fewer shipping days than the third quarter, leading to lower total box shipments. Thus, the company anticipated lower sales volumes for the Packaging segment.

The Zacks Consensus Estimate for the segment’s quarterly revenues is pegged at $1,905 million, suggesting growth of 1.7% from the year-ago quarter’s reported number. The consensus mark for the segment’s operating income is pinned at $289 million, indicating a fall of 22% from the prior-year reported figure.

In the Paper segment, while the company is likely to have gained from the price increase that took effect in September, volume is likely to have been lower than that in the seasonally stronger third quarter. Scheduled outage expenses are expected to have been higher. Expected higher operating costs, primarily labor and benefit expenses, along with anticipated colder weather resulting in higher energy costs, are expected to have hurt the segment’s profits in the quarter under review.

The Zacks Consensus Estimate for the Paper segment’s revenues is pegged at $152 million for the December-end quarter, suggesting growth of 6.2% from the year-ago reported figure. The Zacks Consensus Estimate for the segment’s operating income is pinned at $28 million, indicating a 33.3% increase from the $21 million reported in the prior-year quarter.

What Our Model Indicates

Our proven model doesn’t conclusively predict an earnings beat for Packaging Corp this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here, as you can see below.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP:  PKG has an Earnings ESP of -0.22%.

Zacks Rank: The company currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Price Performance

Over the past year, shares of Packaging Corp have declined 3% compared with the industry’s fall of 1.2%.

 

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Stocks to Consider

Here are some Industrial Products stocks worth considering, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases.

Deere & Co. DE currently has an Earnings ESP of +2.83% and a Zacks Rank #2. The Zacks Consensus Estimate for DE’s first-quarter fiscal 2023 earnings has moved 2.6% north in the past 60 days and is currently pegged at $5.49 per share. The consensus mark suggests year-over-year growth of 88.1%

The Zacks Consensus Estimate for DE’s quarterly revenues is pegged at $11.4 billion, indicating growth of 33.9% from the prior-year quarter’s reported level. DE has a trailing four-quarter earnings surprise of 7.1%, on average.

Xylem XYL currently has an Earnings ESP of +2.10% and a Zacks Rank #3. The Zacks Consensus Estimate for fourth-quarter 2022 earnings has been unchanged in the past 60 days and is pegged at 79 cents per share. This suggests year-over-year growth of 25.4%

The Zacks Consensus Estimate for XYL’s quarterly revenues is pegged at $1.4 billion, indicating year-over-year growth of 6.1%. XYL has a trailing four-quarter earnings surprise of 13.3%, on average.

Illinois Tool Works ITW currently has an Earnings ESP of +1.92% and a Zacks Rank #3. The Zacks Consensus Estimate for fourth-quarter 2022 earnings has increased 0.4% in the past 60 days and is pegged at $2.61 per share. This suggests year-over-year growth of 33.8%

The Zacks Consensus Estimate for quarterly revenues is pegged at $3.9 billion, indicating growth of 5.3% from the prior-year quarter’s reported level. ITW has a trailing four-quarter earnings surprise of 4.2%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Illinois Tool Works Inc. (ITW) : Free Stock Analysis Report

Deere & Company (DE) : Free Stock Analysis Report

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

Xylem Inc. (XYL) : Free Stock Analysis Report

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