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1. Company Snapshot

1.a. Company Description

Packaging Corporation of America manufactures and sells containerboard and corrugated packaging products in the United States.The company operates through Packaging and Paper segments.The Packaging segment offers various containerboard and corrugated packaging products, such as conventional shipping containers used to protect and transport manufactured goods; multi-color boxes and displays that help to merchandise the packaged product in retail locations; and honeycomb protective packaging products, as well as packaging for meat, fresh fruit and vegetables, processed food, beverages, and other industrial and consumer products.


This segment sells its corrugated products through a direct sales and marketing organization, independent brokers, and distribution partners.The Paper segment manufactures and sells commodity and specialty papers, as well as communication papers, including cut-size office papers, and printing and converting papers.This segment sells white papers through its sales and marketing organization.


Packaging Corporation of America was founded in 1867 and is headquartered in Lake Forest, Illinois.

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1.b. Last Insights on PKG

Packaging Corporation of America's recent performance was driven by strong second-quarter 2025 results, with net income of $242 million, or $2.67 per share, and net sales of $2.2 billion, up from $2.1 billion in 2024. The company's higher prices and mix boosted results across both segments, leading to a 13% year-over-year EPS jump. Additionally, the acquisition of Greif's containerboard business for $1.8 billion is expected to enhance PCA's production capacity and drive future growth.

1.c. Company Highlights

2. Packaging Corporation of America Delivers Strong Q3 Earnings

Packaging Corporation of America's third-quarter 2025 earnings report showcased a robust financial performance, with net income reaching $227 million, or $2.51 per share, excluding special items. Total company EBITDA, excluding special items, was $503 million, a $42 million increase from the same quarter in 2024. The actual EPS came out at $2.73, slightly below estimates of $2.83. Revenue growth was driven by the acquisition of Greif Containerboard business, which was completed on September 2, and impacted earnings per share by $0.11 after special items.

Publication Date: Oct -27

📋 Highlights
  • Net Income & EBITDA Growth:: Q3 2025 net income rose to $227M ($2.51/share), with EBITDA up $42M YoY to $503M.
  • Greif Acquisition Impact:: The acquisition reduced EPS by $0.11 post-special items, with EBITDA run rate at $300M and $60M synergy target by 2027.
  • Financial Strength:: Record cash flow of $469M from operations and $277M free cash flow, with Q4 guidance at $2.40/share.
  • Cost & Efficiency Gains:: Fiber cost reductions and mill efficiency improvements (e.g., 50% quality boost at Massillon/Riverville) offset higher D&A by $20M QoQ.

Segment Performance

The Packaging segment saw an increase in earnings, driven by higher prices and mix, lower fiber costs, and a lower maintenance outage expense. However, these improvements were partially offset by higher operating costs, lower production and sales volume, and higher depreciation and amortization expenses. According to Thomas Hassfurther, President, domestic containerboard and corrugated products prices and mix were $0.72 per share above the third quarter of 2024.

Cash Flow and Financial Position

The company's financial results were highlighted by a record cash provided by operations of $469 million and a record free cash flow of $277 million. Kent Pflederer, Chief Financial Officer, discussed the company's financial results and noted that the company expects fourth quarter earnings of $2.40 per share, excluding special items.

Acquisition and Synergies

The acquisition of Greif Containerboard business is expected to bring significant synergies, with an estimated EBITDA run rate for the combined business of around $300 million and synergies expected to reach around $60 million by the second year. Mark Kowlzan and Kent Pflederer noted that the converting side of the business was well-capitalized and in good condition, and the company is seeing immediate improvements in efficiency and quality at the acquired mills.

Valuation and Outlook

With a P/E Ratio of 13.72 and an EV/EBITDA of 11.31, the stock appears to be reasonably valued. Analysts estimate next year's revenue growth at 13.5%. The company's strong financial performance, coupled with its expected synergies from the acquisition, positions it for long-term growth. As Mark Kowlzan stated, "we're seeing positive results and are being conservative with the numbers, but there's always upside depending on the market."

3. NewsRoom

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Packaging Corporation of America Announces Reconfiguration of Wallula, WA Containerboard Mill

Dec -03

Source: businesswire.com

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Stock Of The Day: Is It Time To Buy Packing Corporation?

Dec -03

Source: benzinga.com

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Edgestream Partners L.P. Makes New $5.91 Million Investment in Packaging Corporation of America $PKG

Dec -03

Source: defenseworld.net

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Packaging Corporation of America (NYSE:PKG) Receives Consensus Rating of “Moderate Buy” from Brokerages

Dec -01

Source: defenseworld.net

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Packaging Corporation of America $PKG Stock Position Reduced by Creative Planning

Nov -24

Source: defenseworld.net

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AXQ Capital LP Makes New Investment in Packaging Corporation of America $PKG

Nov -23

Source: defenseworld.net

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Packaging Corporation of America $PKG Shares Acquired by American Century Companies Inc.

Nov -23

Source: defenseworld.net

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Avantax Advisory Services Inc. Raises Stake in Packaging Corporation of America $PKG

Nov -20

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.94%)

6. Segments

Packaging

Expected Growth: 4.0%

Packaging Corporation of America's 4.0% growth is driven by increasing e-commerce demand, rising online shopping, and growing need for sustainable packaging solutions. Additionally, the company's strategic acquisitions, operational efficiencies, and product innovations in specialty packaging also contribute to its growth momentum.

Paper

Expected Growth: 3.5%

Packaging Corporation of America's 3.5% growth is driven by increasing e-commerce demand, rising online shopping trends, and growing need for sustainable packaging solutions. Additionally, the company's strategic acquisitions, operational efficiencies, and cost savings initiatives contribute to its growth momentum.

Corporate and Other Segment

Expected Growth: 2.5%

The 2.5% growth in Corporate and Other Segment of Packaging Corporation of America is driven by increased sales of specialty packaging products, higher pricing, and cost savings from operational efficiencies. Additionally, strategic acquisitions and investments in emerging markets have contributed to the segment's growth.

7. Detailed Products

Containerboard

A type of paperboard used to manufacture corrugated containers, such as boxes and cases.

Kraft Paper

A type of paper made from wood pulp, used for packaging, wrapping, and crafting.

Corrugated Containers

Boxes and cases made from corrugated paperboard, used for shipping and storing goods.

Specialty Packaging

Customized packaging solutions for specific products, such as food, beverages, and pharmaceuticals.

Bleached Paperboard

A type of paperboard used in packaging, printing, and converting applications.

Recycled Paper

Paper products made from recycled fibers, used in packaging, printing, and writing applications.

8. Packaging Corporation of America's Porter Forces

Forces Ranking

Threat Of Substitutes

Packaging Corporation of America faces moderate threat from substitutes due to the availability of alternative packaging materials and sustainable options.

Bargaining Power Of Customers

Customers have limited bargaining power due to the company's diversified customer base and lack of concentration.

Bargaining Power Of Suppliers

Suppliers have moderate bargaining power due to the company's dependence on a few key suppliers for raw materials.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry is high due to the competitive nature of the packaging industry, with several established players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 42.48%
Debt Cost 3.95%
Equity Weight 57.52%
Equity Cost 8.01%
WACC 6.28%
Leverage 73.86%

11. Quality Control: Packaging Corporation of America passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Sonoco

A-Score: 5.9/10

Value: 7.2

Growth: 5.0

Quality: 5.6

Yield: 8.0

Momentum: 1.5

Volatility: 8.3

1-Year Total Return ->

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PCA

A-Score: 5.6/10

Value: 3.8

Growth: 4.7

Quality: 6.0

Yield: 6.0

Momentum: 4.5

Volatility: 8.7

1-Year Total Return ->

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Greif

A-Score: 5.6/10

Value: 6.9

Growth: 4.2

Quality: 4.2

Yield: 7.0

Momentum: 4.0

Volatility: 7.0

1-Year Total Return ->

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Reynolds Consumer Products

A-Score: 5.5/10

Value: 5.0

Growth: 5.0

Quality: 5.5

Yield: 7.0

Momentum: 1.5

Volatility: 9.0

1-Year Total Return ->

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Graphic Packaging

A-Score: 5.3/10

Value: 8.0

Growth: 6.4

Quality: 4.2

Yield: 4.0

Momentum: 1.0

Volatility: 8.3

1-Year Total Return ->

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WestRock

A-Score: 3.4/10

Value: 4.9

Growth: 2.7

Quality: 2.7

Yield: 2.0

Momentum: 5.0

Volatility: 3.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

198.48$

Current Price

198.48$

Potential

-0.00%

Expected Cash-Flows