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

Zacks Equity Research

Packaging Corporation of America PKG is set to release fourth-quarter 2019 results, after the closing bell on Jan 29.
 
Q4 Estimates

The Zacks Consensus Estimate for Packaging Corporation’s to-be-reported quarter’s earnings is currently pegged at $1.71, suggesting a decline of 21.2% from the prior-year quarter. The Zacks Consensus Estimate for total sales of $1.70 billion indicates a fall of 2.8% from the year-ago 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

Let’s see how things are shaping up prior to this announcement.

Factors at Play

The impact of slightly lower prices, a seasonally less rich mix in corrugated products and marginally lower shipments with one less shipping day in the Packaging segment is likely to get reflected in the Packaging segment’s fourth-quarter 2019 performance.

Moreover, containerboard sales volume is also anticipated to be lower as the company continued to build inventory during the to-be-reported quarter in preparation for first-quarter 2020 scheduled maintenance outages at its three largest containerboard mills.

The Zacks Consensus Estimate for the Packaging segment’s net sales is pegged at $1,447 million for the quarter, suggesting a decline of 4% from the prior-year quarter. The Zacks Consensus Estimate for adjusted operating income of the segment is pegged at $227 million, flat compared with the year-ago quarter.

Traditionally volumes are seasonally weaker in the fourth quarter for the Paper segment. This, along with lower average prices is likely to show on the segment’s revenues. Due to cold weather, energy costs are likely to be higher for the to-be-reported quarter. Other operating and converting costs are likely to be higher as well, which includes the costs associated with the start-up of the new Richland, WA box plant. Scheduled maintenance outage costs might be higher sequentially. All these factors are expected to get reflected in the segment’s operating profits in the to-be-reported quarter.

The Zacks Consensus Estimate for the Paper segment’s revenues is currently pegged at $219 million, suggesting a decline of 18% from the prior-year quarter. The Zacks Consensus Estimate for the segment’s adjusted operating income of the segment is at $38.5 million, indicating a fall of 8% from the year-ago quarter.

Nevertheless, Packaging Corporation continues to gain from the e-commerce boom that has led to increase in demand in boxes.

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 chances 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: Packaging Corporation has an Earnings ESP of 0.00%.

Zacks Rank: The company currently carries a Zacks Rank of 4 (Sell).

Price Performance

In a year’s time, shares of Packaging Corporation have gained around 15%, against the industry’s decline of 23%.

Stocks Poised to Beat Earnings Estimates

Here are a few 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:

Lindsay Corporation LNN has an Earnings ESP of +8.07% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dover Corporation DOV has a Zacks Rank #3 and an Earnings ESP of +1.72%.

Lincoln Electric Holdings, Inc. LECO, a Zacks Ranked #3 stock, has an Earnings ESP of +1.01%.

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Packaging Corporation of America (PKG) : Free Stock Analysis Report
 
Lincoln Electric Holdings, Inc. (LECO) : Free Stock Analysis Report
 
Lindsay Corporation (LNN) : Free Stock Analysis Report
 
Dover Corporation (DOV) : Free Stock Analysis Report
 
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