Packaging Corporation Posts Strong Q3 Results

Manufacturing company Packaging Corporation of America (PKG) has reported better-than-expected results for the third quarter ended September 30, 2021, as its earnings and revenue figures for the quarter surpassed the Street’s estimates.

Following the news, shares of the company gained 3.1% to close at $138.05 in extended trade on Monday.

Quarterly net sales grew 18.1% year-over-year to $2 billion, topping analysts’ expectations of $1.93 billion. The growth in net sales was primarily driven by a 21.9% year-over-year rise witnessed in the revenues generated by the company’s Packaging segment, which stood at $1.83 billion and accounted for about 91.5% of the total quarterly net sales.

Meanwhile, quarterly earnings were up 71.3% year-over-year to $2.69 per share and surpassed the consensus estimates of $2.39 per share.

The CEO of Packaging Corporation, Mark W. Kowlzan, said, “Packaging segment demand remained strong and our teams did a tremendous job of implementing our previously announced containerboard and corrugated products price increases. The containerboard mills set an all-time quarterly sales volume record, and our box plants set new third quarter records for total corrugated products shipments as well as shipments per day.

“We also expect inflation to continue with most of our other operating and converting costs, along with higher freight and logistics expenses. And lastly, as we have mentioned previously, we expect scheduled outage costs to be approximately ($.25) per share higher than the third quarter. Considering these items, we expect fourth quarter earnings of $2.04 per share.” (See Packaging Corporation stock chart on TipRanks)

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Recently, Wells Fargo analyst Gabrial Hajde reiterated a Hold rating on the stock with a price target of $145, which implies upside potential of 8.3% from current levels.

Consensus among analysts is a Hold based on 4 Holds and 1 Sell. The average Packaging Corporation price target of $137.75 implies upside potential of 1.7% from current levels. Shares have gained about 15.7% over the past year.

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