Packaging Corporation of America (PKG) continues to see upward revisions of the Zacks Consensus Estimates. Analysts are currently calling for full-year earnings of 97 cents per share, which is up from 60 cents over the past 3 months.

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.

Higher Forecasts

The company continues to see upward revisions of the Zacks Consensus Estimates. Analysts are currently calling for full-year earnings of 97 cents per share, which is up from 60 cents over the past 3 months.

Analysts are see 25 cents per share for the third quarter, versus the 3 months-ago level of 13 cents.

The third-quarter report is scheduled for release on Oct 19.

Robust Results

The company 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.”

PKG shares spiked on the strong quarter and have been outpacing the market since, trading near a 52-week high.

Solid Income

The company declared a quarterly dividend of 15 cents per share, noting that it will be paid to shareholders of record as of September 15 with a payment date of October 15.

Packaging Corporation offers a dividend yield of 2.9%, beating the industry average of 1.8%.

Stellar Fundamentals

Packaging Corporation offers a return on equity (ROE) on of 17%, exceeding the industry average of 12%. The company’s net profit margin of 9% tops the industry average of 4%.

Zacks Investment Research
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