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Packaging Corporation (PKG) Beats on Q1 Earnings & Revenues
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Packaging Corporation of America (PKG - Free Report) reported first-quarter 2018 adjusted earnings of $1.55 per share, which climbed 22% year over year. Earnings per share came in above management’s guidance of $1.52, as well as beat the Zacks Consensus Estimate of $1.53.
Including one-time items, earnings came in at $1.48 per share compared with $1.24 per share reported in the year-ago quarter.
Operational Update
Net sales for the quarter came in at $1.69 billion, up 10% from the $1.54 billion recorded in the year-ago quarter. The reported figure also beat the Zacks Consensus Estimate of $1.63 billion.
Packaging Corporation of America Price, Consensus and EPS Surprise
Cost of products sold rose 11.4% year over year to $1.33 billion in the quarter. Gross profit jumped 5% to $356 million from $338 million witnessed in the prior-year quarter. Gross margin contracted 100 basis points (bps) year over year to 21% in the quarter. Selling, general and administrative expenses escalated 5.6% to $135 million from $128 million incurred in the year-ago quarter. Operating income advanced 4.7% year over year to $213 million.
Segment Performance
Packaging: Sales from this segment went up to $1.4 billion from $1.3 billion reported in the prior-year period. Segment EBITDA, excluding special items, came in at $308 million in the first quarter compared with $274 million in the year-earlier quarter. Containerboard production totaled 953,000 tons, while containerboard inventory was up 31,000 tons compared to first-quarter 2017.
Printing Papers: Sales from this segment came in at $269 million in the reported quarter, up from $259 million witnessed in the year-earlier quarter. Segment EBITDA, excluding special items, for the quarter declined to $31 million from $42 million reported in the year-earlier period.
Cash Position
At the end of the first quarter, the company had cash balance of $102 million compared with $254 million witnessed at the end of the prior-year quarter.
Outlook
Packaging Corporation expects demand in Packaging segment to remain strong in second-quarter 2018, resulting in higher corrugated products and containerboard shipments. The company will continue to implement the previously-announced Packaging segment price increases. In the Paper segment, it expects volumes to be lower due to conversion of the No. 3 machine at the company’s Wallula Mill from paper to linerboard. The segment will benefit from paper price hike.
The company projects that recycled fiber prices will remain slightly lower. Packaging Corporation will also gain from lower maintenance outage costs and a lower tax rate.
However, prevalent price inflation in chemical and freight costs, and incremental wage pressure remain headwinds. Considering these, the company has guided earnings per share of $1.96 for the second quarter.
Share Price Performance
Over the past year, Packaging Corporation has outperformed the industry with respect to price performance. The stock has gained 17%, while the industry recorded growth of around 9%.
Zacks Rank & Key Picks
Packaging Corporation carries a Zacks Rank #3 (Hold).
Axon Enterprise has a long-term earnings growth rate of 25%. Its shares have appreciated 70%, over the past year.
DMC Global has a long-term earnings growth rate of 20%. The company’s shares have surged 168% during the past year.
Ashtead Group has a long-term earnings growth rate of 15%. The stock has gained 33% in a year’s time.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Packaging Corporation (PKG) Beats on Q1 Earnings & Revenues
Packaging Corporation of America (PKG - Free Report) reported first-quarter 2018 adjusted earnings of $1.55 per share, which climbed 22% year over year. Earnings per share came in above management’s guidance of $1.52, as well as beat the Zacks Consensus Estimate of $1.53.
Including one-time items, earnings came in at $1.48 per share compared with $1.24 per share reported in the year-ago quarter.
Operational Update
Net sales for the quarter came in at $1.69 billion, up 10% from the $1.54 billion recorded in the year-ago quarter. The reported figure also beat the Zacks Consensus Estimate of $1.63 billion.
Packaging Corporation of America Price, Consensus and EPS Surprise
Packaging Corporation of America Price, Consensus and EPS Surprise | Packaging Corporation of America Quote
Cost of products sold rose 11.4% year over year to $1.33 billion in the quarter. Gross profit jumped 5% to $356 million from $338 million witnessed in the prior-year quarter. Gross margin contracted 100 basis points (bps) year over year to 21% in the quarter. Selling, general and administrative expenses escalated 5.6% to $135 million from $128 million incurred in the year-ago quarter. Operating income advanced 4.7% year over year to $213 million.
Segment Performance
Packaging: Sales from this segment went up to $1.4 billion from $1.3 billion reported in the prior-year period. Segment EBITDA, excluding special items, came in at $308 million in the first quarter compared with $274 million in the year-earlier quarter. Containerboard production totaled 953,000 tons, while containerboard inventory was up 31,000 tons compared to first-quarter 2017.
Printing Papers: Sales from this segment came in at $269 million in the reported quarter, up from $259 million witnessed in the year-earlier quarter. Segment EBITDA, excluding special items, for the quarter declined to $31 million from $42 million reported in the year-earlier period.
Cash Position
At the end of the first quarter, the company had cash balance of $102 million compared with $254 million witnessed at the end of the prior-year quarter.
Outlook
Packaging Corporation expects demand in Packaging segment to remain strong in second-quarter 2018, resulting in higher corrugated products and containerboard shipments. The company will continue to implement the previously-announced Packaging segment price increases. In the Paper segment, it expects volumes to be lower due to conversion of the No. 3 machine at the company’s Wallula Mill from paper to linerboard. The segment will benefit from paper price hike.
The company projects that recycled fiber prices will remain slightly lower. Packaging Corporation will also gain from lower maintenance outage costs and a lower tax rate.
However, prevalent price inflation in chemical and freight costs, and incremental wage pressure remain headwinds. Considering these, the company has guided earnings per share of $1.96 for the second quarter.
Share Price Performance
Over the past year, Packaging Corporation has outperformed the industry with respect to price performance. The stock has gained 17%, while the industry recorded growth of around 9%.
Zacks Rank & Key Picks
Packaging Corporation carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the same sector include Axon Enterprise, Inc , DMC Global Inc. (BOOM - Free Report) and Ashtead Group PLC (ASHTY - Free Report) . All three stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Axon Enterprise has a long-term earnings growth rate of 25%. Its shares have appreciated 70%, over the past year.
DMC Global has a long-term earnings growth rate of 20%. The company’s shares have surged 168% during the past year.
Ashtead Group has a long-term earnings growth rate of 15%. The stock has gained 33% in a year’s time.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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