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Packaging Corp's (PKG) Earnings & Sales Trump Estimates in Q1
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Packaging Corporation of America (PKG - Free Report) reported adjusted earnings per share of $1.50 in first-quarter 2020, surpassing the Zacks Consensus Estimate of $1.20. Earnings also came in ahead of management’s guidance of $1.20 per share. However, the reported figure fell 24.2% 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 annual outage expenses, depreciation expenses and other costs. These negatives were, however, partly offset by higher volumes in the Packaging segment, lower operating and converting costs, lower freight and logistics expenses, soft interest expense as well as non-operating pension expense.
Including one-time items, earnings in the reported quarter came in at $1.49 compared with the prior-year quarter’s $1.97.
Operational Update
Sales for the March-end quarter edged down 1.54% to $1,709 million from the prior-year quarter’s $1,734 million. The reported figure, however, beat the Zacks Consensus Estimate of $1,651 million.
Cost of products sold was up 2.4% year over year to $1,344 million in the first quarter. Gross profit went down 13.3% to $365 million from the $421.4 million witnessed in the prior-year period. Selling, general and administrative expenses rose 4.3% to $146 million from the $140 million incurred in the year-ago quarter. Adjusted total segment operating income declined 24% year over year to $210.3 million.
Packaging Corporation of America Price, Consensus and EPS Surprise
Packaging: Sales in this segment went down to $1,468 million from the $1,478 million recorded in the year-earlier period. Segmental income, excluding special items, came in at $201 million in the quarter compared with the $250 million witnessed in the prior-year period.
Printing Papers: This segment’s revenues slid 9.3% year over year to $217.4 million in the quarter. Adjusted segment income declined to around $33 million from the $46 million reported in the year-earlier period.
Cash Position
The company had a cash balance of $764 million in the March-end quarter compared with the $442 million recorded in the prior-year quarter.
Outlook
The company has not issued any guidance for the second quarter given the uncertainty related to the coronavirus pandemic and its impact on the global economy. Demand surge in the Packaging business places it well for the ongoing quarter. Moreover, the company will continue to provide cost-effective, sustainable, and renewable products amid the current turbulent situation.
Share Price Performance
Over the past year, Packaging Corporation’s stock has lost 3.4% compared with the industry’s decline of 44.3%.
Zacks Rank and Stocks to Consider
Packaging Corporation currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector are Sharps Compliance Corp. , Silgan Holdings Inc. (SLGN - Free Report) and Intellicheck, Inc. (IDN - Free Report) . While Sharps Compliance and Silgan sport a Zacks Rank #1 (Strong Buy), Intellicheck carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Sharps Compliance has an estimated earnings growth rate of 800% for the current year. In a year's time, the company’s shares have soared 105%.
Silgan has an expected earnings growth rate of 11.1% for 2020. In the past year, the company’s shares have gained 16.4%.
Intellicheck has a projected earnings growth rate of 112.5% for the ongoing year. Over the past year, the company’s shares have rallied 31.6%.
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Packaging Corp's (PKG) Earnings & Sales Trump Estimates in Q1
Packaging Corporation of America (PKG - Free Report) reported adjusted earnings per share of $1.50 in first-quarter 2020, surpassing the Zacks Consensus Estimate of $1.20. Earnings also came in ahead of management’s guidance of $1.20 per share. However, the reported figure fell 24.2% 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 annual outage expenses, depreciation expenses and other costs. These negatives were, however, partly offset by higher volumes in the Packaging segment, lower operating and converting costs, lower freight and logistics expenses, soft interest expense as well as non-operating pension expense.
Including one-time items, earnings in the reported quarter came in at $1.49 compared with the prior-year quarter’s $1.97.
Operational Update
Sales for the March-end quarter edged down 1.54% to $1,709 million from the prior-year quarter’s $1,734 million. The reported figure, however, beat the Zacks Consensus Estimate of $1,651 million.
Cost of products sold was up 2.4% year over year to $1,344 million in the first quarter. Gross profit went down 13.3% to $365 million from the $421.4 million witnessed in the prior-year period. Selling, general and administrative expenses rose 4.3% to $146 million from the $140 million incurred in the year-ago quarter. Adjusted total segment operating income declined 24% year over year to $210.3 million.
Packaging Corporation of America Price, Consensus and EPS Surprise
Packaging Corporation of America price-consensus-eps-surprise-chart | Packaging Corporation of America Quote
Segmental Performance
Packaging: Sales in this segment went down to $1,468 million from the $1,478 million recorded in the year-earlier period. Segmental income, excluding special items, came in at $201 million in the quarter compared with the $250 million witnessed in the prior-year period.
Printing Papers: This segment’s revenues slid 9.3% year over year to $217.4 million in the quarter. Adjusted segment income declined to around $33 million from the $46 million reported in the year-earlier period.
Cash Position
The company had a cash balance of $764 million in the March-end quarter compared with the $442 million recorded in the prior-year quarter.
Outlook
The company has not issued any guidance for the second quarter given the uncertainty related to the coronavirus pandemic and its impact on the global economy. Demand surge in the Packaging business places it well for the ongoing quarter. Moreover, the company will continue to provide cost-effective, sustainable, and renewable products amid the current turbulent situation.
Share Price Performance
Over the past year, Packaging Corporation’s stock has lost 3.4% compared with the industry’s decline of 44.3%.
Zacks Rank and Stocks to Consider
Packaging Corporation currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector are Sharps Compliance Corp. , Silgan Holdings Inc. (SLGN - Free Report) and Intellicheck, Inc. (IDN - Free Report) . While Sharps Compliance and Silgan sport a Zacks Rank #1 (Strong Buy), Intellicheck carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Sharps Compliance has an estimated earnings growth rate of 800% for the current year. In a year's time, the company’s shares have soared 105%.
Silgan has an expected earnings growth rate of 11.1% for 2020. In the past year, the company’s shares have gained 16.4%.
Intellicheck has a projected earnings growth rate of 112.5% for the ongoing year. Over the past year, the company’s shares have rallied 31.6%.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>