RockTenn Company (RKT), the packaging products manufacturer, reported record earnings for the fiscal second quarter of 2009 which surprised on estimates by 3.03%.

On Apr 27, RockTenn reported record adjusted earnings per share that rose 55% to $1.02 compared to 66 cents in the year ago quarter.

Sales fell $9.6 million to $673.3 million from the year ago period due to reduced volumes and decreased recycled fiber pricing. However, sales increased in the Corrugated Packaging segment due to the acquisition of Southern Container.

Lower commodity costs, for both recycled fiber and energy, also helped the company’s performance.

Consensus estimates for the fiscal third quarter have been holding steady over the last 60 days at 86 cents per share. Full-year estimates are up 3.4% to $3.64 from $3.52 per share in the prior 2 months.

Value Fundamentals

When we last reviewed RockTenn on Mar 25, it was a Zacks #1 Rank (strong buy) stock. It has since moved to a Zacks #2 Rank (buy) stock. It is still an attractive value stock with a forward P/E of 11.4 and a price-to-book ratio of 2.36.

The company has a 1-year return on equity (ROE) of 20.77%. As an added bonus, it also pays a dividend with a current yield of 1.00%.

Zacks Investment Research
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