What's in Store for Packaging Corp.'s (PKG) Q2 Earnings?
Packaging Corporation of America PKG is set to release second-quarter 2023 results on Jul 24, after the closing bell.
Q1 Results
In the last reported quarter, Packaging Corp.’s revenues fell on a year-over-year basis and missed the Zacks Consensus Estimate. Earnings missed the consensus estimate and also decreased year over year.
PKG has a trailing four-quarter earnings surprise of 3.6%, on average.
Packaging Corporation of America Price and EPS Surprise
Packaging Corporation of America price-eps-surprise | Packaging Corporation of America Quote
Q2 Estimates
The Zacks Consensus Estimate for Packaging Corp.’s second-quarter earnings per share is pegged at $1.96, suggesting a decline of 39.3% from the prior-year quarter’s reported level.
The consensus estimate for total sales is pegged at $1.99 billion, indicating a 11.2% decline from the year-ago quarter’s reported number.
Factors at Play
Packaging Corp.’s second-quarter results are expected to reflect the impacts of the weakness in packaging demand. This is due to the ongoing inflationary pressures, high interest rates and supply-chain disruptions through the quarter. Customers have been working to reduce their high inventory levels, which have 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 negated some of these headwinds for the Packaging segment in the second quarter. Our model predicts the segment’s volume to decline 7% year over year in the quarter.
However, lower prices in the Packaging segment in the second quarter of 2023 as a result of the recent decreases in the published domestic containerboard prices, as well as lower export prices are likely to have impacted the segment’s revenues. Price and mix impact is expected to be an unfavorable 6.3% in the quarter, as per our model.
The Zacks Consensus Estimate for the segment’s quarterly revenues is pegged at $1,798 million, suggesting a decline of 9.1% from the year-ago quarter’s reported number. The consensus mark for the segment’s operating income is pegged at $252 million, indicating a fall of 33.7% from the prior-year reported figure.
The Paper segment’s revenues are likely to reflect weak volumes in the quarter. We expect volume to fall 11.7% from last year. The segment is likely to have gained from the price increase that took effect in September 2022. We expect a positive pricing/mix impact of 9.4% in the second quarter. However, higher operating costs, primarily labor and benefit expenses, and 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 $147 million for the March-end quarter, suggesting growth of 1.3% from the year-ago reported figure. The consensus estimate for the segment’s operating income is $31.7 million, indicating a 31.3% increase from the $22.3 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 time around. 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 before they’re reported with our Earnings ESP Filter.
Earnings ESP: PKG has an Earnings ESP of -0.68%.
Zacks Rank: The company currently carries a Zacks Rank #5 (Strong Sell).
Price Performance
Over the past year, shares of Packaging Corp have lost 0.2% against the industry’s 0.6% growth.
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Stocks That Warrant a Look
Here are some stocks with the right combination of elements to post an earnings beat in their upcoming releases.
EnerSys ENS, expected to release earnings soon, has an Earnings ESP of +8.32% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ENS’ fiscal first-quarter earnings is currently pegged at $1.64 per share, suggesting a year-over-year improvement of 42.6%.
AptarGroup, Inc. ATR, scheduled to release earnings on Jul 27, has an Earnings ESP of +1.77%.
The Zacks Consensus Estimate for ATR’s earnings for the second quarter is pegged at $1.13 per share. It currently carries a Zacks Rank of 2.
Eaton Corporation plc ETN, expected to release earnings shortly, has an Earnings ESP of +0.18%.
The consensus estimate for Eaton’s earnings for the second quarter is currently pegged at $2.11 per share. ETN currently carries a Zacks Rank of 3.
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