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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. PCA's Q4 2025 Earnings: A Strong Finish to a Robust Year

Packaging Corporation of America (PCA) reported a net income of $209 million or $2.32 per share, excluding special items, for the fourth quarter of 2025, slightly missing analyst estimates of $2.41 EPS. Revenue for the quarter came in at $2.4 billion, with total company EBITDA, excluding special items, reaching $486 million, up from $439 million in the same period last year. The company's full-year 2025 earnings were $888 million or $9.84 per share, compared to $815 million or $9.04 per share in 2024, with net sales of $9 billion, up from $8.4 billion in 2024.

Publication Date: Feb -08

📋 Highlights
  • Q4 Net Income Decline:: Adjusted net income of $209M ($2.32/share) in Q4 2025, down from $222M ($2.47/share) in Q4 2024, despite $102M ($1.13/share) reported net income.
  • Cash Flow Strength:: Record $443M cash from operations in Q4 2025, with $124M free cash flow, and $283M remaining share repurchase authority after buying 760K shares at $201/share.
  • Storm Impact:: Winter storm caused $15M cost impact (~$10/ton) and disrupted box plant operations, though mills in Counce and Riverville avoided major issues.
  • 2026 Guidance:: Q1 2026 EPS guidance of $2.20/share (excluding items), driven by seasonal demand and a $70/ton containerboard price increase effective March 1.
  • CapEx Plans:: 2026 CapEx budget of $840–$870M includes completing Ohio box plant, Jackson Winder project, and upgrades, with potential reduction to below $800M in 2027.

Operational Highlights

PCA's domestic containerboard and corrugated products prices and mix were $0.50 per share above the fourth quarter of 2024, driven by the company's efforts to optimize its product mix and pricing. The acquired plants from Greif had a strong quarter, outperforming expectations and setting a positive tone for the new year. As Tom Hassfurther, President, noted, "The acquired plants had a very good quarter, outperforming expectations and were off to a strong start to the year."

Cash Flow and Capital Allocation

The company generated a record $443 million in cash from operations in the fourth quarter, with free cash flow of $124 million. PCA repurchased 760,000 shares during the quarter at an average price of $201.03, demonstrating its commitment to returning value to shareholders. The company's balance sheet remains high-quality, providing flexibility for future investments.

Guidance and Outlook

PCA expects earnings to be $2.20 per share, excluding special items, in the first quarter of 2026, driven by seasonal improvements in mix and benefits from a containerboard price increase in March. The company is assessing the impact of a recent winter storm on its operations and earnings. With a current P/E Ratio of 35.29 and EV/EBITDA of 14.33, investors are pricing in a certain level of growth and profitability. Analysts estimate revenue growth of 4.8% for the next year, which is in line with the company's improving demand outlook and efforts to maximize returns on capital expenditure.

Valuation and Growth Prospects

With a ROE of 16.91% and ROIC of 9.22%, PCA is demonstrating its ability to generate returns on equity and invested capital. The company's Net Debt / EBITDA ratio of 2.12 indicates a manageable level of debt. As PCA continues to navigate the complexities of the packaging industry, its focus on operational excellence, strategic capital allocation, and commitment to shareholder returns will be key drivers of its future success.

3. NewsRoom

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Bank of New York Mellon Corp Grows Position in Packaging Corporation of America $PKG

Jan -30

Source: defenseworld.net

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Packaging Corp of America (PKG) Q4 2025 Earnings Call Highlights: Strong Sales Growth Amid Operational Challenges

Jan -28

Source: gurufocus.com

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Packaging Corporation of America (PKG) Q4 2025 Earnings Call Transcript

Jan -28

Source: seekingalpha.com

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Packaging Corp Earnings Miss Estimates in Q4, Sales Increase Y/Y

Jan -28

Source: zacks.com

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Stock Market Today: Dow Jones, Nasdaq Futures Gain As Investors Await Fed Decision, Jerome Powell's Speech—Starbucks, Seagate, Tesla In Focus

Jan -28

Source: feeds.benzinga.com

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Packaging Corp. (PKG) Q4 Earnings: Taking a Look at Key Metrics Versus Estimates

Jan -28

Source: zacks.com

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Packaging Corp. (PKG) Misses Q4 Earnings and Revenue Estimates

Jan -28

Source: zacks.com

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Packaging Corporation of America Reports Fourth Quarter and Full Year 2025 Results

Jan -27

Source: businesswire.com

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: 6.1/10

Value: 7.3

Growth: 5.0

Quality: 5.6

Yield: 8.0

Momentum: 2.0

Volatility: 8.7

1-Year Total Return ->

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Reynolds Consumer Products

A-Score: 6.0/10

Value: 5.6

Growth: 4.9

Quality: 5.6

Yield: 7.0

Momentum: 3.5

Volatility: 9.3

1-Year Total Return ->

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Greif

A-Score: 6.0/10

Value: 8.2

Growth: 4.0

Quality: 5.8

Yield: 6.0

Momentum: 4.0

Volatility: 8.0

1-Year Total Return ->

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PCA

A-Score: 5.2/10

Value: 3.9

Growth: 4.7

Quality: 5.6

Yield: 6.0

Momentum: 3.0

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
Graphic Packaging

A-Score: 5.0/10

Value: 7.8

Growth: 6.4

Quality: 4.3

Yield: 4.0

Momentum: 0.5

Volatility: 7.0

1-Year Total Return ->

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Stock-Card
WestRock

A-Score: 3.9/10

Value: 7.3

Growth: 2.7

Quality: 2.3

Yield: 2.0

Momentum: 6.0

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

241.78$

Current Price

241.78$

Potential

-0.00%

Expected Cash-Flows