Packaging Corporation Hits 52-Week High on Strong Tailwinds

You must take a look at the leading manufacturer of containerboard and corrugated packaging products, Packaging Corporation of America PKG, as the stock exhibited a bullish run, over the past one year.

The stock scaled a 52-week high of $105.81 yesterday, though it closed a tad lower at $105.76. This displays a solid year-to-date return of approximately 24.7% compared with the Zack's Containers- Paper/Plastic industry's gain of 8.7%, over the same period.

The Zacks Consensus Estimate for 2017 and 2018 remained unchanged at $5.97 and $6.69, respectively, over the last 30 days. Further, it has long-term earnings growth rate of 13%, highlighting its inherent potential.

The stock has a market cap of $9.9 billion. Average volume of shares traded over the last three months was approximately 673.7K. We note that Packaging Corporation has beaten the Zacks Consensus Estimate in three out of the trailing four quarters, with an average positive earnings surprise of 3.41%.

Packaging Corporation of America Price and Consensus

 

Packaging Corporation of America Price and Consensus | Packaging Corporation of America Quote

Growth Catalysts

The encouraging share price momentum can be attributed to the company's expanding product portfolio and acquisitions. These drove first-quarter 2017 results. The company's adjusted earnings of $1.27 per share, increased 14.4% year over year, which beat the Zacks Consensus Estimate by 3 cents.

Packaging Corporation is poised to gain from focus on its acquisition strategy. In 2016, the company acquired TimBar Corporation and Columbus Container, Inc. The transaction will allow further optimization and enhancement of its mill capacity. The integration of the recent corrugated plant acquisitions is on track.

The company's corrugated product manufacturing plants produce a wide variety of packaging products, which include conventional shipping containers used to protect and transport manufactured goods, multi-colored boxes, and displays with strong visual appeal.

In addition, Packaging Corporation is a large producer of packaging for meat, fresh fruit and vegetables, processed food, beverages, along with other industrial and consumer products. The diverse product portfolio mitigates operating risks associated with any downturn in a particular product category.

In the second quarter, the company will continue to implement its previously announced packaging segment price increases. Corrugated products shipments are anticipated to be higher owing to strong demand and the two recent acquisitions.

Zacks Rank & Key Picks

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

Better-ranked stocks in the same space include Parker-Hannifin Corporation PH, AptarGroup, Inc. ATR and UFP Technologies, Inc. UFPT. All three stocks currently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Parker-Hannifin generated a positive average earnings surprise of 14.94% over the trailing four quarters. AptarGroup has delivered an average positive earnings surprise of 1.78% in the last four quarters. UFP Technologies has an average positive earnings surprise of 7.91% for the past four quarters.

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