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What's in Store for Packaging Corporation (PKG) Q3 Earnings?

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Zacks Equity Research
·4 min read
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Packaging Corporation of America PKG is set to release third-quarter 2020 results, after the closing bell on Oct 26.

Q2 Results

In the last reported quarter, Packaging Corporation’s earnings beat the Zacks Consensus Estimate, while sales missed the same. Both top- and bottom-line figure declined year over year.

Q3 Estimates

The Zacks Consensus Estimate for Packaging Corporation’s third-quarter earnings is currently pegged at $1.36, suggesting a decline of 29.2% from the prior-year quarter. The Zacks Consensus Estimate for total sales is pinned at $1.66 billion, indicating a decline of 5.4% from the year-ago quarter.

Packaging Corporation has a trailing four-quarter earnings surprise of 8.5%, on average.

Factors to Note

Packaging products are essential for the distribution of food, beverage and pharmaceutical products. Hence, the elevated demand for meat, fruit and vegetables, processed food, beverages, medicine, and other consumer products owing to the coronavirus crisis is expected to have aided the company’s Packaging segment’s third-quarter performance.

The company has been gaining from the e-commerce boom, driven by demand for boxes. Additionally, the pandemic has been fueling e-commerce growth as consumers’ demand for online grocery, beverage and pharmaceuticals delivery services have been increasing, following the travel restrictions imposed by governments worldwide. These factors might have contributed to the company’s July-September quarter performance.

Meanwhile, the pandemic has affected paper consumption in schools, offices and businesses, straining paper demand. To balance the supply of Boise Paper products with demand, Packaging Corporation temporarily idled both paper machines and the sheet-converting operation at its Jackson Mill in Jackson, AL for the months of May and June. This move might have reduced paper production by approximately 70,000 tons during the third quarter. Also, the paper segment continues to bear the brunt of bleak uncoated freesheet market. These are likely to get reflected in the company’s results for the quarter to be reported.

Segment Projections

The Zacks Consensus Estimate for the Packaging segment’s quarterly net sales is pegged at $1,479 million, suggesting a decline of 0.7% from the prior-year period. The Zacks Consensus Estimate for the segment’s adjusted operating income is pinned at $220 million, indicating a year-on-year fall of 7.6%.

The Zacks Consensus Estimate for the Paper segment’s revenues is currently pegged at $149 million, calling for a plunge of 38.7% from the year-ago quarter. The Zacks Consensus Estimate for the segment’s adjusted operating loss is pegged at $2 million, as against the operating profit of $48.1 million recorded in the prior-year quarter.

Packaging Corporation of America Price and EPS Surprise

Packaging Corporation of America Price and EPS Surprise
Packaging Corporation of America Price and EPS Surprise

Packaging Corporation of America price-eps-surprise | Packaging Corporation of America Quote

Earnings Whispers

Our proven model doesn’t conclusively predict an earnings beat for Packaging Corporation this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Packaging Corporation is 0.00%.

Zacks Rank: Packaging Corporation currently carries a Zacks Rank of 2.

Price Performance

In a year’s time, shares of Packaging Corporation have gained 7.3% compared with the industry’s growth of 8%.

Stocks Poised to Beat Earnings Estimates

Here are some Industrial Products stocks, which you may consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases.

AGCO Corporation AGCO has an Earnings ESP of +6.07% and a Zacks Rank of 1, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lindsay Corporation LNN, currently a Zacks #2 Ranked stock, has an Earnings ESP of +11.01%.

Caterpillar Inc. CAT has a Zacks Rank #3 and an Earnings ESP of +0.84%, at present.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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AGCO Corporation (AGCO) : Free Stock Analysis Report
Caterpillar Inc. (CAT) : Free Stock Analysis Report
Lindsay Corporation (LNN) : Free Stock Analysis Report
Packaging Corporation of America (PKG) : Free Stock Analysis Report
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