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What's in Store for Packaging Corporation's (PKG) Q4 Earnings?

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Zacks Equity Research
·4 min read
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Packaging Corporation of America PKG is set to release fourth-quarter 2020 results, after the closing bell on Jan 27.

Q3 Results

In the last reported quarter, Packaging Corporation’s earnings and revenues beat the Zacks Consensus Estimate. However, both the top and bottom lines declined year over year. Higher volumes in Packaging segment, lower operating costs, and softer converting and other costs were offset by lower prices and mix in the Packaging and Paper segments, dismal volumes in the Paper segment, and higher scheduled maintenance outage costs.

Q4 Estimates

The Zacks Consensus Estimate for Packaging Corporation’s fourth-quarter earnings is currently pegged at $1.41, suggesting a decline of 17.5% from the prior-year quarter. The Zacks Consensus Estimate for total sales stands at $1.71 billion, indicating a dip of 0.5% from the year-ago quarter. The Zacks Consensus Estimate for the company’s fourth-quarter earnings moved north over the past 30 days.

The company has surpassed earnings estimates in three of the trailing four quarters and matched the same once. It has a trailing four-quarter earnings surprise of 12.1%, on average.

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

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 fourth-quarter performance.

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

Meanwhile, the pandemic has affected paper consumption in schools, offices and businesses, straining paper demand. Also, the paper segment continues to bear the brunt of bleak uncoated freesheet market. Further, the segment has been bearing the brunt of weak paper demand due to increasing preference for electronic data transmission, e-readers and electronic document storage alternatives. These are likely to get reflected in the company’s results for the quarter to be reported.

What Our Model Indicates

Our proven model predicts an earnings beat for Packaging Corporation this season. 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. 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 +1.98%.

Zacks Rank: Packaging Corporation currently carries a Zacks Rank #3.

Price Performance

In a year’s time, shares of Packaging Corporation have gained 32.4% compared with the industry’s growth of 12.6%.

Other Stocks Poised to Beat Earnings Estimates

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

AGCO Corporation AGCO has an Earnings ESP of +1.59% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dover Corporation DOV has an Earnings ESP of +5.55% and a Zacks Rank #2.

Sealed Air Corporation SEE has an Earnings ESP of +2.90% and a Zacks Rank of 2.

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Packaging Corporation of America (PKG) : Free Stock Analysis Report
 
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Sealed Air Corporation (SEE) : Free Stock Analysis Report
 
Dover Corporation (DOV) : Free Stock Analysis Report
 
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