Shares of Rock-Tenn Company (RKT) reached a new 52-week high of $108.97 on July 11, exceeding the previous high of $108.
The Norcross, Ga.-based paperboard and packaging company, which has a market cap of roughly $7.6 billion, has delivered a robust one-year return of about 94% and year-to-date return of about 54%, outperforming the S&P 500. The company’s long-term estimated earnings per share growth rate is 15.6%. Average volume of shares traded over the last three months is roughly 743K.
What’s Driving Rock-Tenn Up?
Shares of Rock-Tenn are ascending, following its second-quarter fiscal 2013 (ended Mar 31, 2013) results reported on Apr 23. The company reported earnings per share of $1.12, up 15% year over year, driven by strong operating performance. It was well ahead of the Zacks Consensus Estimate of $1.02.
Rock-Tenn raised its cash flow guidance to a new range of $10 to $10.50 per share, indicating increased demand for folding carton and paper for fiscal 2013. The company also hiked its quarterly dividend by 33% from 22.5 cents per share to 30 cents per share.
Rock-Tenn provided the initial cash flow guidance for fiscal 2014 in a band of $10.50 to $11.50 per share, based on expected recovery in containerboard and related box prices.
In addition, packaging industry is expected to see continued growth, fuelled by demand for more expensive films to extend the life of food products. Moreover, Rock-Tenn’s investment in box plants, installation of new standard corrugated box operating system and increase in domestic and export pricing will help to improve its profitability.
Rock-Tenn currently retains a short-term Zacks Rank #2 (Buy).
Other Stocks to Consider
Other stocks with favorable Zacks Rank in the same industry are Domtar Corporation (UFS), KapStone Paper and Packaging Corporation (KS) and Orchids Paper Products Company (TIS). While Domtar Corporation and KapStone Paper carry a Zacks Rank #1 (Strong Buy), Orchids Paper holds a Zacks Rank #2 (Buy).
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