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Packaging Corp's (PKG) Q2 Earnings Top Estimates, Down Y/Y

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Packaging Corporation of America (PKG - Free Report) reported adjusted earnings per share of $1.38 in second-quarter 2020, surpassing the Zacks Consensus Estimate of $1.28. However, the reported figure plunged 32.4% year over year.

This decline resulted from lower prices and mix in the Packaging and Paper segments, dismal volumes in the Paper segment, as well as elevated depreciation expense. These negatives were partly offset by lower operating costs, reduced annual outage expense, lower freight and converting costs as well as other costs.

Including one-time items, earnings in the reported quarter came in at 59 cents per share compared with the prior-year quarter’s $2.04.

Operational Update

Sales for the June-end quarter declined 12.4% year over year to $1,542 million. The reported figure also missed the Zacks Consensus Estimate of $1,672 million.

Cost of products sold was down 8.7% year over year to $1,216 million in the second quarter. Gross profit went down 23.8% year over year to $326 million. Selling, general and administrative expenses came in at $136 million, marking a fall of 5.6%. Adjusted total segment operating income dipped 29% year over year to $198 million.

Packaging Corporation of America Price, Consensus and EPS Surprise

Packaging Corporation of America Price, Consensus and EPS Surprise

Segmental Performance

Packaging: Sales in this segment dropped to $1,410 million from the $1,505 million recorded in the year-earlier period. Segmental income, excluding special items, came in at $224 million in the quarter compared with the $264 million witnessed in the prior-year period.

Printing Papers: This segment’s revenues slipped 48.3% year over year to $123 million in the reported quarter. The segment incurred adjusted operating loss of $5.7 million as against the prior-year quarter’s operating income of $38.8 million.

Cash Position

The company had a cash balance of $853.3 million as of the end of the April-June quarter, up from the year-earlier quarter end’s figure of $569.4 million.

Outlook

Packaging Corporation has not issued any guidance for the third quarter given the uncertainty related to the pandemic and its impact on the global economy. The company expects to benefit from solid corrugated products demand in the current quarter.

Share Price Performance

Packaging Corporation’s stock has gained 5.5% over the past three months, compared with the industry’s growth of 15.3%.


 

Zacks Rank and Other Stocks to Consider

Packaging Corporation currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the Industrial Products sector are Lakeland Industries, Inc. (LAKE - Free Report) , IIVI Incorporated and Energous Corporation (WATT - Free Report) . While Lakeland Industries and IIVI sport a Zacks Rank #1 (Strong Buy), Energous carries a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lakeland Industries has a projected earnings growth rate of 418% for the current fiscal year. The company’s shares have appreciated 50.9% in the past three months.

IIVI has an estimated earnings growth rate of 29% for the ongoing year. The company’s shares have rallied 46% in three months’ time.

Energous has an expected earnings growth rate of 44% for 2020. The stock has soared 252.6% over the past three months.

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