Packaging Corporation of America (PKG Quick QuotePKG - Free Report) is set to release third-quarter 2021 results, after the closing bell on Oct 25.

Q2 Results

In the last reported quarter, Packaging Corporation’s earnings and revenues beat the respective Zacks Consensus Estimate. Both top- and bottom-line figures increased year over year.

Q3 Estimates

The Zacks Consensus Estimate for Packaging Corporation’s third-quarter earnings per share is currently pegged at $2.36, suggesting growth of 50.3% from the prior-year quarter. The Zacks Consensus Estimate for the total sales is pinned at $1.95 billion, indicating a rise of 15% from the year-ago period.

The company has a trailing four-quarter average earnings surprise of 13.4%.

Factors at Play

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 in response to the coronavirus pandemic is expected to have aided the Packaging segment’s July-September quarter performance. Also, strong demand for containerboard and corrugated products are likely to have aided the segment. The Zacks Consensus Estimate for the segment’s quarterly revenues is pegged at $1,810 million, calling for a year-over-year jump of 20.6%. The consensus mark for the company’s operating income is pinned at $339 million, indicating year-over-year growth of 43.6%.

The e-commerce boom has been driving the company’s box demand. Packaging Corporation set a new all-time quarterly record for total box shipments during second-quarter 2021. The company is likely to have gained from this momentum in the third quarter as well.  

Meanwhile, the pandemic has affected paper consumption in schools, offices and businesses, straining paper demand. Also, the paper segment has been impacted unfavorably by the dismal paper demand due to the rising 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. The Zacks Consensus Estimate for the Paper segment’s revenues is pegged at $134 million for the September-end quarter, suggesting a year-over-year decline of 24.7%. The Zacks Consensus Estimate for the segment’s operating income is pinned at $8.97 million compared with the prior-year quarter’s $7.3 million.

Elevated freight and labor costs, material costs, higher operating and energy costs, coupled with rising annual maintenance outage costs at mills, might have dented the company’s margins during the third quarter.

What Our Model Indicates

Our proven model doesn’t conclusively predict 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. 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 -1.87%.

Zacks Rank: Packaging Corporation currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Price Performance

In a year’s time, shares of Packaging Corporation have gained 18% compared with the industry’s growth of 23.7%.

Image Source: Zacks Investment Research

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:

Reliance Steel & Aluminum Co. (RS Quick QuoteRS - Free Report) has an Earnings ESP of +3.54% and flaunts a Zacks Rank of 1, at present.

Columbus McKinnon Corporation (CMCO Quick QuoteCMCO - Free Report) has an Earnings ESP of +5.26% and carries a Zacks Rank #2, currently.

Deere & Company (DE Quick QuoteDE - Free Report) , currently a Zacks #2 Ranked stock, has an Earnings ESP of +5.55%.