Packaging Corp of America
NYSE:PKG
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Packaging Corp of America
NYSE:PKG
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Packaging Corp of America
Packaging Corp. of America makes the brown boxes, shipping cases, and paper materials that move goods through the economy. It produces containerboard and corrugated packaging, then turns that material into custom boxes and packaging for other companies. Its customers are mainly manufacturers, food and beverage companies, consumer brands, and distribution businesses that need strong, low-cost packaging for storage and transport. The company makes money by selling paperboard and finished packaging products, along with converting services that turn flat material into customer-specific boxes and displays. A big part of its business comes from long-term relationships with industrial customers that order packaging repeatedly because they need a steady flow of shipping materials to keep their supply chains running. What makes Packaging Corp. of America different is that it sits on both sides of the packaging chain. It makes much of its own raw packaging paper and also converts it into finished boxes, which gives it more control over supply, quality, and cost than a company that only buys material and resells it. That integrated model makes it an important supplier to businesses that rely on consistent, practical packaging.
Packaging Corp. of America makes the brown boxes, shipping cases, and paper materials that move goods through the economy. It produces containerboard and corrugated packaging, then turns that material into custom boxes and packaging for other companies. Its customers are mainly manufacturers, food and beverage companies, consumer brands, and distribution businesses that need strong, low-cost packaging for storage and transport.
The company makes money by selling paperboard and finished packaging products, along with converting services that turn flat material into customer-specific boxes and displays. A big part of its business comes from long-term relationships with industrial customers that order packaging repeatedly because they need a steady flow of shipping materials to keep their supply chains running.
What makes Packaging Corp. of America different is that it sits on both sides of the packaging chain. It makes much of its own raw packaging paper and also converts it into finished boxes, which gives it more control over supply, quality, and cost than a company that only buys material and resells it. That integrated model makes it an important supplier to businesses that rely on consistent, practical packaging.
Beat and guidance: Packaging Corporation of America reported second-quarter adjusted EPS of $2.35, beating its $2.33 outlook, and guided to $2.91 for the third quarter, excluding special items.
Demand stayed strong: Corrugated demand was described as “very strong” and “tight,” with total shipments up over 24% versus last year and an all-time quarterly shipment record in the legacy business.
Costs hurt legacy results: Higher freight, recycled fiber, and employee benefit costs weighed on the legacy business, partly offsetting strong volume and operational performance.
Price actions flowing through: PCA said the first packaging price increase started to show up in June and will mostly benefit Q3, while the second increase will be realized across Q3 and Q4.
Greif integration ahead: The acquired Greif business outperformed expectations in Q2, and PCA said integration benefits and synergies are tracking ahead of plan, with the TSA expected to end by year-end.
Outlook positive: Management expects continued strong packaging demand, better mill performance, lower packaging outage costs, and higher paper prices in Q3, while freight remains elevated.