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

Packaging Corporation of America PKG is set to release third-quarter 2022 results on Oct 24, after the closing bell.

Q2 Results

In the last reported quarter, Packaging Corp’s earnings and revenues beat their respective Zacks Consensus Estimate and increased year over year.

PKG has a trailing four-quarter earnings surprise of 16.7%, 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

Q3 Estimates

The Zacks Consensus Estimate for Packaging Corp’s third-quarter earnings per share is currently pegged at $2.84, suggesting growth of 5.6% from the prior-year quarter’s levels. The Zacks Consensus Estimate for total sales is pinned at $2.21 billion, indicating a 10.3% rise from the year-ago quarter’s levels.

Factors at Play

Packaging products are essential for distributing food, beverage and pharmaceutical products. Ongoing strong demand for packaging of meat, fruit and vegetables, processed food, beverages, medicine and other consumer products is expected to have aided the Packaging segment’s September quarter’s performance. This segment accounts for around 91% of PKG’s revenues.  Demand for containerboard and corrugated products remains strong across most of PKG’s end markets.

The Zacks Consensus Estimate for the segment’s quarterly revenues is pegged at $2,024 million, calling for growth of 11% from the year-ago quarter’s reported number. The consensus mark for the segment’s operating income is pinned at $376 million, indicating growth of 1% from the prior-year tally.

Management stated that it expects higher scheduled outage costs at the International Falls paper mill for the third quarter as it postponed the scheduled outage due to excessive flooding in the area prior to the outage. This might have dented the Paper segment’s sales volume in the September quarter. Also, the paper segment was impacted unfavorably by dismal paper demand due to the rising preference for electronic data transmission, e-readers and electronic document storage alternatives, and the declining North American uncoated freesheet market. These are likely to be reflected in Packaging Corp’s performance in the quarter to be reported.

The Zacks Consensus Estimate for the Paper segment’s revenues stands at $143 million for the September quarter, suggesting a decline of 5% from the year-ago reported figure. The Zacks Consensus Estimate for the segment’s operating income is pinned at $20.3 million, indicating a 66% increase from the prior-year quarter’s $12.2 million.

Persistent rail service challenges and rail fuel surcharges resulted in higher freight and logistics expenses in the September quarter.  Packaging Corp continued to face inflation in most of its operating and converting costs. These factors along with higher gas, chemical prices and higher labor costs are expected to have negatively impacted PKG’s margins during the third quarter.

What Our Model Indicates

Our proven model doesn’t conclusively predict an earnings beat for Packaging Corp 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. But that’s not the case here as elaborated below.

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

Earnings ESP:  Packaging Corp has an Earnings ESP of -2.35%.

Zacks Rank: Packaging Corp currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Price Performance

Over the past year, shares of Packaging Corp have declined 15.2% compared with the industry’s fall of 12.5%.

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Zacks Investment Research


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Stocks to Consider

Here are some Industrial Products stocks worth considering, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases.

RBC Bearings RBC currently has an Earnings ESP of +3.22% and a Zacks Rank of 1. The Zacks Consensus Estimate for third-quarter 2022 earnings has moved up 5% in the past 60 days to $1.72 per share. The estimate suggests growth of 102% from the year-ago reported figure. RBC has a trailing four-quarter earnings surprise of 9.4%, on average.

The Zacks Consensus Estimate for ROLL’s quarterly revenues is pegged at $363 million, indicating an increase of 126% from the prior-year quarter’s levels.

Mueller Water Products MWA currently has an Earnings ESP of +17.65% and a Zacks Rank of 2. The Zacks Consensus Estimate for third-quarter 2022 earnings is currently pegged at 14 cents per share, suggesting 16.7% growth from the year-ago quarter’s figure. The estimate has gone up 8% over the past 60 days.

The Zacks Consensus Estimate for quarterly revenues is pinned at $320.7 million, suggesting growth of 8.5% from the prior-year tally. MWA has a trailing four-quarter earnings surprise of 5.17%, on average.

O-I Glass Inc. OI currently has an Earnings ESP of +2.20% and a Zacks Rank #2. The Zacks Consensus Estimate for third-quarter 2022 earnings has gone up 3% in the past 60 days and is currently pegged at 61 cents per share. The projection indicates 5.2% growth from the year-ago reported figure.

The Zacks Consensus Estimate for OI’s quarterly revenues is pegged at $1.71 billion, which indicates an improvement of 6.27% from the year-ago reported figure. OI has a trailing four-quarter earnings surprise of 17.4%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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