Log in
Forgot password ?
Become a member for free
Sign up
Sign up
Dynamic quotes 

4-Traders Homepage  >  Equities  >  Nyse  >  Packaging Corp Of America    PKG

Analysis summary4-Traders Strategies 

The Cardboard Giant

share with twitter share with LinkedIn share with facebook
share via e-mail
08/20/2013 | 05:53pm

Paper Packaging

Packaging Corp of America (PCA) is a packaging giant, specialized in cardboard. Located near Chicago in Illinois, the American company has a long history in this traditional activity.
Its products are grouped into three different activities: packaging to protect and transport manufactured goods, boxes and multicolored displays with strong attractiveness for the goods in retail stores and finally boxes in the food and agriculture industry.
Its sales for 2012 totaled $2.8 billion compared to $2.6 billion in 2011 and $2.4 billion in 2010.

The particularity of PCA is its field of expertise (over 50 years). The group is not just a "box seller" as the president said.

Indeed, PCA is wishing to get closer to its customers by adding high quality services (requirements analysis). The group wants to be extremely reactive to client requests. "While you discover our products, we also learn how you conduct your business.", the board said.
Cooperation with customers is very important in the culture of the company.

The group is now worth 5 billion dollars, this exceptional growth over the past five years (x6) comes at a time of exploding trade and transport of goods coupled with a desire to achieve external growth.


The world market is huge with 300 billion dollars, and the United-States remains one of biggest market. However, the packaging business has many difficulties to expand worldwide, competitors produce especially for local customers. To expand its international business, it must go through the construction of a plant or take over a local actor.
The market is dominated by heavyweights like International Paper Company which realized 18 billion in sales (two-third), thanks to its the packaging segment. The second, Amcor, generates more than 12 billion in sales dedicated to the same activity.


- Skills and expertise of the company (50 years)
- Proximity to customers (needs analysis)
- Negotiating at the right price for supply (reputation of a powerful purchase department)
- Techniques and methodologies to meet the constraints of the product to be packaged
- Optimization of the manufacturing process to reduce costs (in 2012, net margin of 5.76% compared to 2.82% for the industry average)


- High valuation level (P/E ratio of 18x for 2013 and 15.5x for 2014, 2 percentage points higher to the industry average)
- Stabilization of operating margin at 17%
- High Capex (6% of sales in 2013) so capital intensive (manufacturing plants, modernization of production lines...)


- Acquisitions and share repurchase in companies to expand its scope of application and range of customers, both in the U.S. and abroad
- The excellent ratio "net debt to EBITDA" allows him to set up this growth strategy
- Potential merger or acquisition by an industry major


- Price increase of commodities (oil, wood...)
- Slowing demand in consumption and distribution

Recent publications of the second quarter (16/07/2013)

- Revenue of 800 million dollars (surprise: +4%)
- An EBIT and net income that perform respectively +7% and +5.5% compared expectations
- A significant increase in EPS for the first six months at USD 1.28 vs USD 1.19 expected

Events to watch

- Publication of third quarter results in October 2013


"The package is not a waste, if you can easily recycle it, it becomes a commercial product" say industry players. In this sentence, the reputation of the container is as valuable and effective as the content.
This theme benefits to the sector obliged to rapidly satisfy customer needs for the management of new products whose packaging is part of the merchandising.

PCA meets these requirements and its experience in cost management gives it a real asset for an investor in the medium term.
In addition, the logical evolution of this industry, with the growth of commerce and trade, go through consolidations or acquisitions that may benefit to Packaging Corp. of America.

Based on an ideal price to set up a buying position (USD 52), and taking into account a theoretical valuation of USD 63, the potential is more than 20%.

This research note is part of the conviction buy list selected by the 4-traders equity research desk, based on fundamental and technical criteria. This stock is likely to be included in our North-American portfolio by the investing team. To be informed of our trades on this stock subscribe to one of our portfolios.

© Zonebourse.com 2013
share with twitter share with LinkedIn share with facebook
share via e-mail

Disclaimer: 4-traders.com is a website published by SURPERFORMANCE SAS. Surperformance or 4-traders.com is not a registered broker-dealer nor a registered investment adviser. You understand that this web site and its content is furnished for your personal, noncommercial, informational purposes only, and that no mention of a particular security in this website constitutes a recommendation to buy, sell, or hold any other security, nor that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Surperformance and 4-traders.com services will not advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Information regarding trading and investment as provided by Surperformance professional is not tailored to the investment needs of any specific person. You acknowledge that you are responsible for your own financial decisions and should seek a registered financial agent depending on your own risk tolerance to advise you on your personal trading activities.

Manufactures containerboard and corrugated packaging productsPackaging Corporation of America manufactures and sells containerboard and corrugated packaging products.It operates through following segments: Packaging, Paper and Corporate and Other.The Packaging segment offers various corrugated... 
Paper Packaging
07/18Earnings Release
More about the company
Financials ($)
Sales 2017 6 250 M
EBIT 2017 941 M
Net income 2017 539 M
Debt 2017 2 208 M
Yield 2017 2,30%
P/E ratio 2017 18,42
P/E ratio 2018 16,29
EV / Sales 2017 1,98x
EV / Sales 2018 1,89x
Capitalization 10 147 M
More Financials
Duration : Period : Day
Packaging Corp Of America Technical Analysis Chart | PKG | US6951561090 | 4-Traders
Duration : Period : Week
Packaging Corp Of America Technical Analysis Chart | PKG | US6951561090 | 4-Traders
Surperformance© ratings  Help  
Fundamental ratings
Overall rating
Trading Rating
Investor Rating
Growth (Revenue)
Earnings quality
Business Predictability
P/E ratio
7 days EPS revision
4 months EPS revision
1 year EPS revision
4 months Revenue revision
1 year Revenue revision
Technical ratings
Short Term Timing
Middle Term Timing
Long Term Timing
Bollinger Spread
Unusual Volumes
More Ratings