Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Packaging Corporation of America (NYSE:PKG) and the best and worst performers in the industrial packaging industry.
Industrial packaging companies have built competitive advantages from economies of scale that lead to advantaged purchasing and capital investments that are difficult and expensive to replicate. Recently, eco-friendly packaging and conservation are driving customers preferences and innovation. For example, plastic is not as desirable a material as it once was. Despite being integral to consumer goods ranging from beer to toothpaste to laundry detergent, these companies are still at the whim of the macro, especially consumer health and consumer willingness to spend.
The 9 industrial packaging stocks we track reported a mixed Q1; on average, revenues missed analyst consensus estimates by 1.6%. while next quarter's revenue guidance was 2.1% below consensus. Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. The start of 2024 has been a different story as mixed signals have led to market volatility, but industrial packaging stocks have shown resilience, with share prices up 5.5% on average since the previous earnings results.
Best Q1: Packaging Corporation of America (NYSE:PKG)
Founded in 1959, Packaging Corporation of America (NYSE: PKG) produces containerboard and corrugated packaging products, also offering displays and protective packaging solutions.
Packaging Corporation of America reported revenues of $1.98 billion, flat year on year, exceeding analysts' expectations by 3.7%. Overall, it was an exceptional quarter for the company with an impressive beat of analysts' volume estimates and a narrow beat of analysts' earnings estimates.
Commenting on reported results, Mark W. Kowlzan, Chairman and CEO, said, “Throughout the quarter, containerboard and corrugated products demand exceeded our expectations. We were able to service this higher demand from strong operational performance at our box plants and containerboard mills as well as from excellent execution of the conversion outage at our Jackson, AL mill which enabled us to restart both machines earlier than planned. Despite these efforts, with the higher demand, we ended the quarter at a record low weeks-of-inventory supply for this time of year. Prices and mix in the Packaging segment moved slightly higher from fourth quarter 2023 levels, although less than we anticipated due to our total announced increase not being recognized in the published benchmark prices. Volume in the Paper segment was very good at about 13% above guidance estimates, and an improved mix moved prices slightly higher from the previous quarter, as expected. In addition, during the quarter we announced a price increase of $100 per ton across all of our paper grades, and we began implementing these increases on April 1st. The strong volume in both the Packaging and Paper segments along with the continued emphasis on cost management and process efficiencies across our manufacturing and converting facilities drove operating and converting costs lower, even with the persistent inflation we continue to experience across most of our cost structure.”
The stock is up 6.8% since reporting and currently trades at $191.35.
Is now the time to buy Packaging Corporation of America? Access our full analysis of the earnings results here, it's free.
Sealed Air (NYSE:SEE)
Founded in 1960, Sealed Air Corporation (NYSE: SEE) specializes in the development and production of protective and food packaging solutions, serving a variety of industries.
Sealed Air reported revenues of $1.33 billion, down 1.4% year on year, outperforming analysts' expectations by 3.8%. It was a very strong quarter for the company with an impressive beat of analysts' volume and earnings estimates.
Sealed Air pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 14.9% since reporting. It currently trades at $36.85.
Is now the time to buy Sealed Air? Access our full analysis of the earnings results here, it's free.
Weakest Q1: Silgan Holdings (NYSE:SLGN)
Established in 1987, Silgan Holdings (NYSE:SLGN) is a supplier of rigid packaging for consumer goods products, specializing in metal containers, closures, and plastic packaging.
Silgan Holdings reported revenues of $1.32 billion, down 7.1% year on year, falling short of analysts' expectations by 4.1%. It was a weak quarter for the company with a miss of analysts' organic revenue estimates.
As expected, the stock is down 2% since the results and currently trades at $45.75.
Read our full analysis of Silgan Holdings's results here.
International Paper (NYSE:IP)
Established in 1898, International Paper (NYSE:IP) produces containerboard, pulp, paper, and materials used in packaging and printing applications.
International Paper reported revenues of $4.62 billion, down 8% year on year, surpassing analysts' expectations by 2.7%. Revenue aside, it was a good quarter for the company with a solid beat of analysts' Cellulose Fibers revenue estimates.
The stock is up 32.5% since reporting and currently trades at $45.60.
Read our full, actionable report on International Paper here, it's free.
Crown Holdings (NYSE:CCK)
Formerly Crown Cork & Seal, Crown Holdings (NYSE:CCK) produces packaging products for consumer marketing companies, including food, beverage, household, and industrial products.
Crown Holdings reported revenues of $2.78 billion, down 6.4% year on year, falling short of analysts' expectations by 5.1%. Taking a step back, it was a weaker quarter for the company with a miss of analysts' revenue estimates.
The stock is down 3.8% since reporting and currently trades at $78.04.
Read our full, actionable report on Crown Holdings here, it's free.
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