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Packaging Corp (PKG) Earnings & Sales Beat Estimates in Q2

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Packaging Corporation of America (PKG - Free Report) reported adjusted earnings per share (EPS) of $3.23 in second-quarter 2022, beating the Zacks Consensus Estimate of $2.87. The bottom line improved 49% year over year.

The upside was primarily driven by higher volume, price and mix in the Packaging segmenthigher prices and mix in the Paper segment, lower scheduled outage expenses and interest expenses and a reduced share count. These gains were somewhat offset by elevated operating and converting costs, freight and logistics expenses, depreciation expenses and lower volume in the Paper segment, as well as a higher tax rate.

Including one-time items, earnings in the reported quarter was $3.20 per share compared with the prior-year quarter’s $2.17 per share.

Operational Update

Sales in the first quarter rose 19% year over year to $2,237 million. The top line surpassed the Zacks Consensus Estimate of $2,133 million.

The cost of products sold was up 15% year over year to $1,648 million in the second quarter. The gross profit surged 31% year over year to $589 million. Selling, general and administrative expenses amounted to $157 million compared with the prior-year quarter’s $146 million. The adjusted total segment operating income climbed 43% year over year to $418.8 million.

Segmental Performance

Packaging: Sales in the segment increased 20% year over year to $2,067 million in the second quarter of 2022. The segment’s adjusted operating profit amounted to $413 million in the reported quarter compared with $314 million in the prior-year quarter.

Paper: The segment’s revenues were $150 million in the April-June quarter, up 5.3% year over year. The segment reported an adjusted operating profit of $26 million compared with the year-ago quarter’s $5.4 million.

Cash Position

Packaging Corp had a cash balance of $811 million at the end of the second quarter of 2022, down from $1,124 million of cash held at the end of the prior-year quarter.

Guidance

Packaging Corp projects third-quarter 2022 EPS to be around $2.80.

Price Performance

Zacks Investment Research
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Packaging Corp’s shares have gained 4.2% in the past year compared with the industry’s growth of 2.8%.

Zacks Rank and Stocks to Consider

Packaging Corporation currently sports a Zacks Rank #3 (Hold).

Some better-ranked stocks from the Industrial Products sector are Greif Inc. (GEF - Free Report) , Titan International (TWI - Free Report) and RBC Bearings . While GEF and TWI each sport a Zacks Rank #1 (Strong Buy), ROLL carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Greif has an estimated earnings growth rate of 37% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 17%.

Greif pulled off a trailing four-quarter earnings surprise of 22.9%, on average. GEF’s shares have risen 14.7% in the past year.

Titan International has an estimated earnings growth rate of 165% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 43%.

Titan International pulled off a trailing four-quarter earnings surprise of 56.4%, on average. TWI’s shares have appreciated 114.7% in a year.

RBC Bearings has an expected earnings growth rate of 48% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 6% in the past 60 days.

RBC Bearings has a trailing four-quarter earnings surprise of 3.4%, on average. ROLL’s shares have moved up 7.4% in the past year.


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