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Packaging Corp. (PKG) Up 1.7% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Packaging Corp. (PKG - Free Report) . Shares have added about 1.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Packaging Corp. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Packaging Corp Q4 Earnings & Sales Top Estimates, Up Y/Y
Packaging Corporation reported adjusted EPS of $2.76 in fourth-quarter 2021, beating the Zacks Consensus Estimate of $2.08. The bottom line surged 108% year over year.
The upside was primarily driven by higher volume, price and mix in the Packaging segment. The Paper segment witnessed increased prices and mix, lower non-operating pension expenses and lower interest expenses. These were partly offset by higher operating costs, freight and logistics expenses, converting costs, scheduled outage expenses and lower sales volume in the Paper segment.
Including one-time items, earnings in the reported quarter were $2.28 per share compared with the prior-year quarter’s $1.30 per share.
Operational Update
Sales in the fourth quarter rose 19% year over year to $2,043 million. The top line surpassed the Zacks Consensus Estimate of $1,917 million.
The cost of products sold was up 11% year over year to $1,533 million in the fourth quarter. The gross profit surged 53% year over year to $509.9 million. Selling, general and administrative expenses amounted to $141 million compared with the prior-year quarter’s $130 million. The adjusted total segment operating income surged 101% year over year to $341 million.
Segmental Performance
Packaging: Sales in the segment increased 22% year over year to $1,881 million in the fourth quarter of 2021. The segment’s adjusted operating profit amounted to $363 million in the reported quarter compared with $213 million in the prior-year quarter.
Paper: The segment’s revenues came in at $143 million in the October-December quarter, down 8.6% year over year. The segment reported an adjusted operating profit of $21 million compared with the year-ago quarter’s $2.5 million.
Cash Position
Packaging Corp had a cash balance of $765 million at the end of 2021, down from $1,123 million of cash held at the end of 2020.
2021 Performance
Packaging Corp reported adjusted EPS of $9.39 in 2021 compared with $5.78 reported in the prior year. Earnings beat the Zacks Consensus Estimate of $8.71. Including one-time items, the bottom line came in at $8.83, up 82.4% from $4.84 reported in 2020.
Sales were up 15% year over year to $7.7 billion from the prior-year figure of $6.7 billion. The top line surpassed the Zacks Consensus Estimate of $7.6 billion.
Outlook
Packaging Corp projects first-quarter 2022 EPS to be around $2.50. Its Packaging segment will benefit from higher corrugated products shipments with three additional shipping days. Shipments per day are likely to rise on a year-over-year basis, owing to strong demand and higher domestic and export prices and mix.
In the Paper segment, Packaging Corp expects higher prices and mix from its previously-announced price increase that was executed last November. Also, the company’s recently-announced price hike is likely to add some benefit.
However, the above-mentioned benefits are likely to be offset by persistent higher operating and converting costs as well as elevated freight and logistics expenses. Also, energy and wood costs will flare up due to seasonal colder weather.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 21.02% due to these changes.
VGM Scores
At this time, Packaging Corp. has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Packaging Corp. has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Packaging Corp. (PKG) Up 1.7% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Packaging Corp. (PKG - Free Report) . Shares have added about 1.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Packaging Corp. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Packaging Corp Q4 Earnings & Sales Top Estimates, Up Y/Y
Packaging Corporation reported adjusted EPS of $2.76 in fourth-quarter 2021, beating the Zacks Consensus Estimate of $2.08. The bottom line surged 108% year over year.
The upside was primarily driven by higher volume, price and mix in the Packaging segment. The Paper segment witnessed increased prices and mix, lower non-operating pension expenses and lower interest expenses. These were partly offset by higher operating costs, freight and logistics expenses, converting costs, scheduled outage expenses and lower sales volume in the Paper segment.
Including one-time items, earnings in the reported quarter were $2.28 per share compared with the prior-year quarter’s $1.30 per share.
Operational Update
Sales in the fourth quarter rose 19% year over year to $2,043 million. The top line surpassed the Zacks Consensus Estimate of $1,917 million.
The cost of products sold was up 11% year over year to $1,533 million in the fourth quarter. The gross profit surged 53% year over year to $509.9 million. Selling, general and administrative expenses amounted to $141 million compared with the prior-year quarter’s $130 million. The adjusted total segment operating income surged 101% year over year to $341 million.
Segmental Performance
Packaging: Sales in the segment increased 22% year over year to $1,881 million in the fourth quarter of 2021. The segment’s adjusted operating profit amounted to $363 million in the reported quarter compared with $213 million in the prior-year quarter.
Paper: The segment’s revenues came in at $143 million in the October-December quarter, down 8.6% year over year. The segment reported an adjusted operating profit of $21 million compared with the year-ago quarter’s $2.5 million.
Cash Position
Packaging Corp had a cash balance of $765 million at the end of 2021, down from $1,123 million of cash held at the end of 2020.
2021 Performance
Packaging Corp reported adjusted EPS of $9.39 in 2021 compared with $5.78 reported in the prior year. Earnings beat the Zacks Consensus Estimate of $8.71. Including one-time items, the bottom line came in at $8.83, up 82.4% from $4.84 reported in 2020.
Sales were up 15% year over year to $7.7 billion from the prior-year figure of $6.7 billion. The top line surpassed the Zacks Consensus Estimate of $7.6 billion.
Outlook
Packaging Corp projects first-quarter 2022 EPS to be around $2.50. Its Packaging segment will benefit from higher corrugated products shipments with three additional shipping days. Shipments per day are likely to rise on a year-over-year basis, owing to strong demand and higher domestic and export prices and mix.
In the Paper segment, Packaging Corp expects higher prices and mix from its previously-announced price increase that was executed last November. Also, the company’s recently-announced price hike is likely to add some benefit.
However, the above-mentioned benefits are likely to be offset by persistent higher operating and converting costs as well as elevated freight and logistics expenses. Also, energy and wood costs will flare up due to seasonal colder weather.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 21.02% due to these changes.
VGM Scores
At this time, Packaging Corp. has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Packaging Corp. has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.