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Last week saw the newest yearly earnings release from Packaging Corporation of America (NYSE:PKG), an important milestone in the company's journey to build a stronger business. It looks like the results were a bit of a negative overall. While revenues of US$6.7b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 6.9% to hit US$4.84 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Packaging Corporation of America after the latest results.
After the latest results, the twelve analysts covering Packaging Corporation of America are now predicting revenues of US$7.02b in 2021. If met, this would reflect a credible 5.4% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 41% to US$6.86. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$7.02b and earnings per share (EPS) of US$6.91 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
The analysts reconfirmed their price target of US$132, showing that the business is executing well and in line with expectations. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Packaging Corporation of America, with the most bullish analyst valuing it at US$150 and the most bearish at US$89.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Packaging Corporation of America's growth to accelerate, with the forecast 5.4% growth ranking favourably alongside historical growth of 4.4% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.4% next year. Packaging Corporation of America is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Packaging Corporation of America going out to 2025, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for Packaging Corporation of America that we have uncovered.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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