Packaging Corporation of America (PKG) recently posted second-quarter adjusted earnings of 28 cents per share, which was below the previous year’s 34 cents but well ahead of the Zacks Consensus Estimate of 16 cents. Sales slipped 11% year-over-year.

Company Description

Packaging Corporation of America produces containerboard and corrugated packaging products in the U.S. The company saw sales of $2.4 billion in 2008. PKG runs 4 paper mills and 68 corrugated product plants in 26 states.

Robust Results

The company recently posted second-quarter adjusted earnings of 28 cents per share, which was below the previous year’s 34 cents but well ahead of the Zacks Consensus Estimate of 16 cents. Sales slipped 11% year-over-year.

Paul T. Stecko, Chairman and CEO of PCA, said, “Business conditions improved significantly during the quarter with higher than expected sales volumes, less market-related mill downtime, and lower operating costs. Compared to the first quarter, our corrugated products shipments were up 10%, or 40,000 tons, and outside sales of containerboard were up 20%, or 16,000 tons. Energy costs were also significantly lower than expected driven by operating efficiencies and lower prices. PCA’s containerboard inventory fell during the quarter, and industry inventories were at their lowest June ending level in almost 30 years.”

Bullish Earnings Forecasts

The current year Zacks Consensus Estimate spiked from 59 cents per share to 91 cents over the past month. For 2010, the Zacks Consensus Estimated jumped from last month’s 58 cents to 92 cents.

Stellar Fundamentals

Packaging Corporation offers a return on equity (ROE) on of 18%, exceeding the industry average of 12%. The company’s net profit margin of 9% tops the industry average of 4%. PKG’s dividend yield of 3% is ahead of the industry average of 2%.

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