Overview

• US packaging producer's Q1 sales rose yr/yr but missed analyst expectations

• Adjusted EPS for Q1 beat analyst expectations

• Company cites favorable prices, lower fiber costs, and improved mix as drivers of earnings

Outlook

• Packaging Corp expects Q2 EPS of $2.33, excluding special items

• Company sees strong Packaging segment demand and higher corrugated volume in Q2

• Company expects higher prices for containerboard, corrugated, and paper products in Q2

Result Drivers

• FAVORABLE PRICES AND MIX - Co said higher prices and improved mix in legacy packaging and paper segments contributed to earnings growth

• LOWER FIBER AND OPERATING COSTS - Lower fiber cost and reduced labor and operating expenses in the legacy packaging business supported results

• HIGHER FREIGHT COSTS AND GREIF LOSS - Higher freight costs and a loss from the acquired Greif operations offset some gains, with Greif loss attributed to lower volume and higher costs from a winter storm

Company press release: ID:nBw7GSXkra

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 6 "strong buy" or "buy", 5 "hold" and 1 "sell" or "strong sell"

• The average consensus recommendation for the paper packaging peer group is "buy"

• Wall Street's median 12-month price target for Packaging Corp of America is $225.00, about 9.6% above its April 22 closing price of $205.24

• The stock recently traded at 20 times the next 12-month earnings vs. a P/E of 18 three months ago

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