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What's in the Offing for Packaging Corp's (PKG) Q1 Earnings?

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Packaging Corporation of America (PKG - Free Report) is set to release first-quarter 2020 results, after the closing bell on Apr 27.

A Sneak Peek into Q4 Results

The company reported mixed results in the fourth quarter. Earnings came in line with the Zacks Consensus Estimate, while sales beat the same. Both top and bottom lines declined year over year.

Which Way are Estimates Treading?

The Zacks Consensus Estimate for Packaging Corporation’s to-be-reported quarter’s earnings is currently pegged at $1.20, suggesting a decline of 39.4% from the prior-year quarter. The Zacks Consensus Estimate for total sales of $1.65 billion indicates a 4.8% fall from the year-ago quarter.

The Zacks Consensus Estimate for the March-end quarter’s earnings remained unrevised over the past 30 days.

Let’s see how things have shaped up prior to this announcement.

Factors at Play

Packaging products are essential for the distribution of food, beverage and pharmaceutical products. Hence, the segment is expected to have benefited in the March-end quarter from the elevated demand for meat, fruit and vegetables, processed food, beverages, medicine, and other consumer products owing to the coronavirus crisis.

However, the impact of soft prices and lower containerboard sales volumes due to the scheduled outages at the three largest containerboard mills might have negatively impacted Packaging segment’s first-quarter 2020 performance. The Zacks Consensus Estimate for the segment’s quarterly net sales is pegged at $1,411 million, suggesting a decline of 4.5% from the prior-year period. The Zacks Consensus Estimate for the segment’s adjusted operating income is $165 million, representing a year-on-year plunge of 34%.

The coronavirus outbreak has affected paper consumption in schools, offices and businesses, straining paper demand. The Zacks Consensus Estimate for the Paper segment’s revenues is currently pegged at $222 million, suggesting a decline of 7.5% year over year. The segment’s quarterly revenues are also expected to reflect the impact of weaker volumes due to scheduled outage at the Jackson, AL mill.

Due to the cold weather, energy and wood costs are likely to have flared up in the to-be-reported quarter. Other operating and converting costs as well as scheduled maintenance outage costs are expected to have gone up as well. The Paper segment’s operating profits in the to-be-reported quarter are likely to reflect the unfavorable impact of all these factors. The Zacks Consensus Estimate for the segment’s adjusted operating income is $30 million, indicating a fall of 34.2% from the year-earlier quarter.

Nevertheless, Packaging Corporation continues to gain from the e-commerce boom that has spurred demand for boxes. In addition, the coronavirus pandemic has fueled e-commerce growth as consumers’ demand for online grocery, beverage and pharmaceuticals delivery services have increased following the travel restrictions imposed by governments all over.

Packaging Corporation of America Price and EPS Surprise

Earnings Whispers

Our proven model doesn’t conclusively predict an earnings beat for Packaging Corporation this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Packaging Corporation has an Earnings ESP of 0.00%.

Zacks Rank: The company currently carries a Zacks Rank of 4 (Sell).

Price Performance

In a year’s time, shares of Packaging Corporation have lost 13% compared with the industry’s decline of 45.1%.

 



Stocks Poised to Beat Earnings Estimates

Here are a few Industrial Products stocks which you may consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases.

Axon Enterprise, Inc. has an Earnings ESP of +2.13% and carries a Zacks Rank of 3, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lawson Products, Inc. currently carries a Zacks Rank #3 and has an Earnings ESP of +3.85%.

Ball Corporation , another Zacks #3 Ranked stock, has an Earnings ESP of +1.56%.

5 Stocks Set to Double

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Packaging Corporation of America (PKG) - free report >>

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