What's in Store for Packaging Corp (PKG) in Q3 Earnings?
Packaging Corporation of America PKG is set to release third-quarter 2023 results on Oct 23, after the closing bell.
Q2 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 but declined year over year.
PKG has a trailing four-quarter earnings surprise of 5.1%, on average.
Packaging Corporation of America Price and EPS Surprise
Packaging Corporation of America price-eps-surprise | Packaging Corporation of America Quote
Q3 Estimates
The Zacks Consensus Estimate for Packaging Corp’s third-quarter earnings per share is pegged at $1.91, suggesting a decline of 32.5% from the prior-year quarter’s reported level. Estimates have been unchanged for the past 60 days.
The consensus estimate for total sales is pegged at $1.96 billion, indicating a 7.8% decline from the year-ago quarter’s reported number.
Factors at Play
Packaging Corp’s third-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 throughout the quarter. Customers have been working to reduce their high inventory levels, which have been affecting order flow and demand for PKG’s products, as witnessed in the past few quarters.
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 of these headwinds for the Packaging segment in the third quarter. Our model predicts the segment’s volume to decline 3.4% year over year in the quarter.
However, lower prices in the Packaging segment in the third 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 impacts are expected to be an unfavorable 5.4% in the quarter, per our model.
The Zacks Consensus Estimate for the segment’s quarterly revenues is pegged at $1.78 billion, suggesting a decline of 8% from the year-ago quarter’s reported number. The consensus mark for the segment’s operating income is pegged at $250.8 million, indicating a fall of 31% from the prior-year reported figure.
The Paper segment’s revenues are likely to reflect weak quarterly volumes. We expect volume to fall 4.7% 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 5.3% for the third 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 $148 million for the September-end quarter, suggesting a fall of 10% from the year-ago reported figure. The consensus estimate for the segment’s operating income is $25.4 million, indicating a 7% fall from the $27.4 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 0.00%.
Zacks Rank: The company currently carries a Zacks Rank #2.
Price Performance
Over the past year, shares of Packaging Corp have gained 37% compared with the industry’s 3.1% 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.
ESAB Corporation ESAB, scheduled to release earnings on Nov 1, has an Earnings ESP of +0.81% and sports 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 ESAB’s third-quarter earnings is pegged at 92 cents per share. Earnings estimates have been unchanged in the past 60 days. It has an average trailing four-quarter earnings surprise of 13.6%.
H&E Equipment Services, Inc. HEES, expected to release earnings on Oct 10, has an Earnings ESP of +14.79%.
The Zacks Consensus Estimate for HEES’ earnings for the third quarter is pegged at $1.31 per share. It currently carries a Zacks Rank of 2. The consensus estimate for 2023 earnings has moved 8% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 24.1%.
Ingersoll Rand Inc. IR, expected to release earnings on Nov 1, has an Earnings ESP of +1.00%. IR currently carries a Zacks Rank of 3.
The consensus estimate for Ingersoll Rand’s earnings for the third quarter is pegged at 70 cents per share. Earnings estimates have been unchanged in the past 60 days. It has an average trailing four-quarter earnings surprise of 14.9%.
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Packaging Corporation of America (PKG) : Free Stock Analysis Report
Ingersoll Rand Inc. (IR) : Free Stock Analysis Report
H&E Equipment Services, Inc. (HEES) : Free Stock Analysis Report
ESAB Corporation (ESAB) : Free Stock Analysis Report
