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3 Packaging Stocks Worth Watching Despite Industry Pressure
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The Zacks Containers - Paper and Packaging industry has been facing weak demand due to lower consumer spending amid an inflationary backdrop. Pricing actions implemented by the industry players will help offset the impacts of supply-chain disruptions and elevated costs and tariffs. The industry will eventually gain support from rising e-commerce activities and solid demand for sustainable and eco-friendly packaging options due to increasing environmental concerns.
Companies like Avery Dennison Corporation (AVY - Free Report) , AptarGroup Inc. (ATR - Free Report) and Karat Packaging (KRT - Free Report) are set to gain from their efforts to capitalize on these trends.
About the Industry
The Zacks Containers - Paper and Packaging industry comprises companies that manufacture paper and plastic packaging products. The packaging solutions provided by the industry help protect and preserve products, extend the shelf life and cut down on wastage and loss across the wide and lengthy range of distribution channels. The products range from containerboard and corrugated packaging to flexible and rigid plastic packaging. Some companies manufacture dispensing pumps, closures, aerosol valves and applicators for the beauty, personal, home care and healthcare markets. The industry serves a wide array of markets, including food, beverage, food services and other consumer products, such as beauty, personal care and home care. They also cater to the chemical, agribusiness, medical, pharmaceutical, electronics and industrial markets, to name a few.
What's Shaping the Future of the Containers - Paper and Packaging Industry?
Industry Facing Weak Demand, High Costs & Tariffs: The industry has been witnessing volume declines due to lower consumer spending on goods, as elevated inflation and higher interest rates have dampened consumer spending. Slowdown in housing and industrial activity has also impacted demand for packaging used in appliances, furniture and construction-related products. Customers have been lowering their inventory, which had built up in response to high demand and supply-chain issues. Producers had to announce downtime, curtailments and selective mill closures, which had an impact on their top-line performances. Higher material, labor and transportation costs and imposition of tariffs added to the margin pressure. The companies have been implementing pricing strategies and cost-reduction actions to negate these headwinds. They are also streamlining their operations and taking steps to realign with high-growth key markets to bolster their performance.
E-commerce Acts as a Key Catalyst: With rising e-commerce activities over the years, the importance of packaging has increased manifold as it maintains the integrity and durability of a product. Packaging also helps withstand the complex product delivery process. E-commerce is expected to surge due to rising Internet penetration, widespread smartphone adoption and the convenience of shopping online. Advancements in digital payments, logistics and personalization are making the online shopping experience faster, safer and more customer-centric. This presents a major growth opportunity for the Containers - Paper and Packaging industry. Also, the industry has significant exposure (more than 60%) to consumer-oriented end markets, such as food and beverages, as well as healthcare. Demand for packaging applications remains fairly stable for these sectors across economic cycles, thus ensuring consistent demand for packaging solutions.
Demand for Eco-Friendly Packaging to Aid Industry: The preference for environmentally friendly biodegradable packaging materials is seeing a steady rise globally, driven by customers’ increasing awareness of environmental issues. The industry is constantly striving to meet the same by adopting the latest technology and bringing innovative products. Industry players have begun incorporating recycled content into production methods. By maximizing recycling, the industry can implement environmentally and economically sustainable production methods.
Zacks Industry Rank Indicates Bleak Prospects
The Zacks Containers - Paper and Packaging industry is a 10-stock group within the broader Zacks Industrial Products sector. The industry currently carries a Zacks Industry Rank #206, which places it at the bottom 17% of the 247 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates weak prospects in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Despite the dim near-term prospects of the industry, we will present a few stocks that you may want to consider for your portfolio. However, it is worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Versus Broader Market
The Containers - Paper and Packaging industry has underperformed its sector and the S&P 500 over the past year. The industry has gained 3.2% compared with the sector’s growth of 17.5%. Meanwhile, the S&P 500 has gained 17.5%.
One-Year Price Performance
Industry's Current Valuation
The trailing 12-month EV/EBITDA ratio, a commonly used multiple for valuing Containers - Paper and Packaging companies, shows that the industry is currently trading at 10.14X compared with the S&P 500’s 17.86X and the Industrial Products sector’s trailing 12-month EV/EBITDA of 20.04X. This is shown in the charts below.
Enterprise Value/EBITDA (EV/EBITDA) Ratio TTM
Enterprise Value/EBITDA (EV/EBITDA) Ratio TTM
Over the last five years, the industry traded as high as 16.31X and as low as 9.93X, with the median at 12.40X.
3 Containers - Paper and Packaging Stocks to Keep an Eye on
Avery Dennison: The company is focused on five key priorities: accelerating growth in high-value product categories, expanding profitability in its base businesses, driving productivity, disciplined capital management and advancing environmentally and socially responsible practices and solutions. Avery Dennison is also implementing long-term strategic restructuring initiatives to strengthen growth in its core businesses and free up resources for investment in higher-value categories that support margins. About 40% of its revenues are generated from labeling non-durable consumer goods, including food, beverages, home and personal care products, where demand has remained resilient. Over the longer term, rising demand in emerging markets, supported by a growing middle class and increased consumption of packaged goods, along with the shift toward pressure-sensitive labeling technologies, is expected to support growth. The company is also pursuing pricing and re-engineering initiatives to offset inflationary cost pressures and improve operational efficiency.
The Zacks Consensus Estimate for Mentor, OH-based Avery Dennison’s fiscal 2026 earnings has moved up 1.5% over the past 60 days. The estimate indicates year-over-year growth of 6.5%. AVY has an estimated long-term earnings growth rate of 8.1% and currently carries a Zacks Rank # 3 (Hold).
AptarGroup: The company has leveraged targeted acquisitions and investments in capabilities to enhance its technology content, broaden its product portfolio and expand its commercial reach. Its established relationships with leading healthcare and consumer brands continue to create opportunities for new product placements and support demand across key end markets. AptarGroup is also maintaining a balanced capital-allocation strategy, directing funds toward equipment and capacity expansion, selective acquisitions, dividends and share repurchases. For full-year 2026, the company expects capital expenditures in the range of $260-$280 million, reflecting continued investment in its operations and growth opportunities. Meanwhile, ATR’s focus on cost discipline, operational efficiency and pricing actions will help protect profitability amid ongoing cost pressures.
The Zacks Consensus Estimate for AptarGroup’s fiscal 2026 earnings has moved up 0.6% in the past 60 days. The Crystal Lake, IL-based company has an estimated long-term earnings growth of 7.2%. ATR currently carries a Zacks Rank of 3.
Price & Consensus: ATR
Karat Packaging: The company reported record second-quarter sales, driven by solid customer demand and accelerated momentum in its online business. During the quarter, the company added four new chain accounts. Meanwhile, online sales increased 23.6% year over year, highlighting the growing contribution of its digital channel to overall performance. The company is focused on improving operational efficiency and maintaining disciplined cost management to support sustainable profitability as the business expands. KRT is also ramping up its manufacturing capabilities to meet rising demand and is implementing initiatives aimed at significantly increasing online sales. In addition, the company plans to broaden its product pipeline, with an emphasis on eco-friendly innovations. These efforts are expected to enhance product offerings, capitalize on evolving consumer preferences and strengthen the company's competitive position over the long term.
The Zacks Consensus Estimate for Karat Packaging’s 2026 earnings indicates year-over-year growth of 69%. The estimate has moved up 49.5% over the past 60 days. The Chino, CA-based company has a Zacks Rank of 3 at present and a long-term estimated earnings growth rate of around 13%.
View the Zacks #1 Rank List
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3 Packaging Stocks Worth Watching Despite Industry Pressure
The Zacks Containers - Paper and Packaging industry has been facing weak demand due to lower consumer spending amid an inflationary backdrop. Pricing actions implemented by the industry players will help offset the impacts of supply-chain disruptions and elevated costs and tariffs. The industry will eventually gain support from rising e-commerce activities and solid demand for sustainable and eco-friendly packaging options due to increasing environmental concerns.
Companies like Avery Dennison Corporation (AVY - Free Report) , AptarGroup Inc. (ATR - Free Report) and Karat Packaging (KRT - Free Report) are set to gain from their efforts to capitalize on these trends.
About the Industry
The Zacks Containers - Paper and Packaging industry comprises companies that manufacture paper and plastic packaging products. The packaging solutions provided by the industry help protect and preserve products, extend the shelf life and cut down on wastage and loss across the wide and lengthy range of distribution channels. The products range from containerboard and corrugated packaging to flexible and rigid plastic packaging. Some companies manufacture dispensing pumps, closures, aerosol valves and applicators for the beauty, personal, home care and healthcare markets. The industry serves a wide array of markets, including food, beverage, food services and other consumer products, such as beauty, personal care and home care. They also cater to the chemical, agribusiness, medical, pharmaceutical, electronics and industrial markets, to name a few.
What's Shaping the Future of the Containers - Paper and Packaging Industry?
Industry Facing Weak Demand, High Costs & Tariffs: The industry has been witnessing volume declines due to lower consumer spending on goods, as elevated inflation and higher interest rates have dampened consumer spending. Slowdown in housing and industrial activity has also impacted demand for packaging used in appliances, furniture and construction-related products. Customers have been lowering their inventory, which had built up in response to high demand and supply-chain issues. Producers had to announce downtime, curtailments and selective mill closures, which had an impact on their top-line performances. Higher material, labor and transportation costs and imposition of tariffs added to the margin pressure. The companies have been implementing pricing strategies and cost-reduction actions to negate these headwinds. They are also streamlining their operations and taking steps to realign with high-growth key markets to bolster their performance.
E-commerce Acts as a Key Catalyst: With rising e-commerce activities over the years, the importance of packaging has increased manifold as it maintains the integrity and durability of a product. Packaging also helps withstand the complex product delivery process. E-commerce is expected to surge due to rising Internet penetration, widespread smartphone adoption and the convenience of shopping online. Advancements in digital payments, logistics and personalization are making the online shopping experience faster, safer and more customer-centric. This presents a major growth opportunity for the Containers - Paper and Packaging industry. Also, the industry has significant exposure (more than 60%) to consumer-oriented end markets, such as food and beverages, as well as healthcare. Demand for packaging applications remains fairly stable for these sectors across economic cycles, thus ensuring consistent demand for packaging solutions.
Demand for Eco-Friendly Packaging to Aid Industry: The preference for environmentally friendly biodegradable packaging materials is seeing a steady rise globally, driven by customers’ increasing awareness of environmental issues. The industry is constantly striving to meet the same by adopting the latest technology and bringing innovative products. Industry players have begun incorporating recycled content into production methods. By maximizing recycling, the industry can implement environmentally and economically sustainable production methods.
Zacks Industry Rank Indicates Bleak Prospects
The Zacks Containers - Paper and Packaging industry is a 10-stock group within the broader Zacks Industrial Products sector. The industry currently carries a Zacks Industry Rank #206, which places it at the bottom 17% of the 247 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates weak prospects in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Despite the dim near-term prospects of the industry, we will present a few stocks that you may want to consider for your portfolio. However, it is worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Versus Broader Market
The Containers - Paper and Packaging industry has underperformed its sector and the S&P 500 over the past year. The industry has gained 3.2% compared with the sector’s growth of 17.5%. Meanwhile, the S&P 500 has gained 17.5%.
One-Year Price Performance
Industry's Current Valuation
The trailing 12-month EV/EBITDA ratio, a commonly used multiple for valuing Containers - Paper and Packaging companies, shows that the industry is currently trading at 10.14X compared with the S&P 500’s 17.86X and the Industrial Products sector’s trailing 12-month EV/EBITDA of 20.04X. This is shown in the charts below.
Enterprise Value/EBITDA (EV/EBITDA) Ratio TTM
Enterprise Value/EBITDA (EV/EBITDA) Ratio TTM
Over the last five years, the industry traded as high as 16.31X and as low as 9.93X, with the median at 12.40X.
3 Containers - Paper and Packaging Stocks to Keep an Eye on
Avery Dennison: The company is focused on five key priorities: accelerating growth in high-value product categories, expanding profitability in its base businesses, driving productivity, disciplined capital management and advancing environmentally and socially responsible practices and solutions. Avery Dennison is also implementing long-term strategic restructuring initiatives to strengthen growth in its core businesses and free up resources for investment in higher-value categories that support margins. About 40% of its revenues are generated from labeling non-durable consumer goods, including food, beverages, home and personal care products, where demand has remained resilient. Over the longer term, rising demand in emerging markets, supported by a growing middle class and increased consumption of packaged goods, along with the shift toward pressure-sensitive labeling technologies, is expected to support growth. The company is also pursuing pricing and re-engineering initiatives to offset inflationary cost pressures and improve operational efficiency.
The Zacks Consensus Estimate for Mentor, OH-based Avery Dennison’s fiscal 2026 earnings has moved up 1.5% over the past 60 days. The estimate indicates year-over-year growth of 6.5%. AVY has an estimated long-term earnings growth rate of 8.1% and currently carries a Zacks Rank # 3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price & Consensus: AVY
AptarGroup: The company has leveraged targeted acquisitions and investments in capabilities to enhance its technology content, broaden its product portfolio and expand its commercial reach. Its established relationships with leading healthcare and consumer brands continue to create opportunities for new product placements and support demand across key end markets. AptarGroup is also maintaining a balanced capital-allocation strategy, directing funds toward equipment and capacity expansion, selective acquisitions, dividends and share repurchases. For full-year 2026, the company expects capital expenditures in the range of $260-$280 million, reflecting continued investment in its operations and growth opportunities. Meanwhile, ATR’s focus on cost discipline, operational efficiency and pricing actions will help protect profitability amid ongoing cost pressures.
The Zacks Consensus Estimate for AptarGroup’s fiscal 2026 earnings has moved up 0.6% in the past 60 days. The Crystal Lake, IL-based company has an estimated long-term earnings growth of 7.2%. ATR currently carries a Zacks Rank of 3.
Price & Consensus: ATR
Karat Packaging: The company reported record second-quarter sales, driven by solid customer demand and accelerated momentum in its online business. During the quarter, the company added four new chain accounts. Meanwhile, online sales increased 23.6% year over year, highlighting the growing contribution of its digital channel to overall performance. The company is focused on improving operational efficiency and maintaining disciplined cost management to support sustainable profitability as the business expands. KRT is also ramping up its manufacturing capabilities to meet rising demand and is implementing initiatives aimed at significantly increasing online sales. In addition, the company plans to broaden its product pipeline, with an emphasis on eco-friendly innovations. These efforts are expected to enhance product offerings, capitalize on evolving consumer preferences and strengthen the company's competitive position over the long term.
The Zacks Consensus Estimate for Karat Packaging’s 2026 earnings indicates year-over-year growth of 69%. The estimate has moved up 49.5% over the past 60 days. The Chino, CA-based company has a Zacks Rank of 3 at present and a long-term estimated earnings growth rate of around 13%.
Price & Consensus: KRT