What's in Store for Packaging Corp (PKG) in Q4 Earnings?
Packaging Corporation PKG is set to release fourth-quarter 2023 results on Jan 24, after the closing bell.
Q3 Results
In the last reported quarter, Packaging Corp’s revenues fell on a year-over-year basis and missed the Zacks Consensus Estimate. Earnings surpassed the consensus estimate and increased year over year.
PKG has a trailing four-quarter earnings surprise of 6.8%, on average.
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 $1.80, suggesting a decline of 23.4% from the prior-year quarter’s reported level. Estimates have moved north by 1% in the past 60 days.
The consensus estimate for total sales is pegged at $1.89 billion, indicating a 4.4% decline from the year-ago quarter’s reported number.
Factors at Play
Packaging Corp’s fourth-quarter results are expected to reflect the impacts of lower prices in the Packaging segment. This is primarily due to the recent decrease in the published benchmark index grades being realized throughout the third quarter, as well as a seasonally less rich mix. Price and mix impacts are expected to be an unfavorable 5.9% in the quarter, per our model.
Given that packaging products are essential for the distribution of food, beverage and pharmaceutical products, the stable demand for these products and growth in e-commerce activities are likely to have negated some headwinds for the Packaging segment in the fourth quarter. Our model predicts the segment’s volume to increase 1.3% year over year in the quarter.
The Zacks Consensus Estimate for the segment’s quarterly revenues is pegged at $1.72 billion, suggesting a decline of 4.6% from the year-ago quarter’s reported number. The consensus mark for the segment’s operating income is pegged at $225 million, indicating a fall of 20.4% from the prior-year reported figure.
In the Paper segment, volume is likely to be lower than that reported in the seasonally stronger third quarter, and prices and mix are expected to have trended lower with declines in the index prices. We expect volume to fall 12.4% year over year.
We expect a positive pricing/mix impact of 3.6% for the fourth quarter. 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 $129 million for the December-end quarter, suggesting a fall of 16% from the year-ago reported figure. The consensus estimate for the segment’s operating income is $23.2 million, indicating a 27.2% fall from the prior-year quarter.
What Our Model Indicates
Our proven model predicts 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. That’s precisely 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 1.89%.
Zacks Rank: The company currently carries a Zacks Rank #2.
Price Performance
Over the past year, shares of Packaging Corp have gained 28.4% compared with the industry’s 0.9% growth.
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Stocks That Warrant a Look
Here are some companies with the right combination of elements to post an earnings beat in their upcoming releases.
EnerSys ENS, expected to release earnings on Feb 14, has an Earnings ESP of +9.86% and flaunts a Zacks Rank of 1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ENS’ earnings for the fourth quarter is pegged at $2.32 per share. The consensus estimate for quarterly earnings has moved 25% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 10.3%.
ESAB Corporation ESAB, expected to release earnings on Mar 5, has an Earnings ESP of +0.49% and a Zacks Rank of 2 at present.
The Zacks Consensus Estimate for ESAB’s fourth-quarter earnings is pegged at $1.03 per share. Earnings estimates have been unchanged in the past 60 days. It has an average trailing four-quarter earnings surprise of 14.9%.
Ingersoll Rand Inc. IR, scheduled to release earnings on Feb 25, has an Earnings ESP of +1.64%. IR currently carries a Zacks Rank of 3.
The consensus estimate for Ingersoll Rand’s earnings for the fourth quarter is pegged at 76 cents per share. Earnings estimates have been unchanged in the past 60 days. It has an average trailing four-quarter earnings surprise of 16.1%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Packaging Corporation of America (PKG) : Free Stock Analysis Report
Ingersoll Rand Inc. (IR) : Free Stock Analysis Report
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ESAB Corporation (ESAB) : Free Stock Analysis Report
