Packaging Corp. of America (PKG) experienced a rise in stock price following their second-quarter earnings report, in which they exceeded analysts’ expectations. The company reported earnings of $2.31 per share, surpassing the estimated $1.93 per share.
One of the main contributors to this positive outcome was the reduction in operating costs and freight and logistics expenses, as stated by the company during their earnings call.
According to analyst Mark Weintraub from Seaport Research Partners, Packaging Corp.’s second-quarter EBITDA margins of 22.6% were impressive considering the challenging business environment. Weintraub rates the stock with a Buy recommendation and a price target of $165.
While the demand environment remains difficult, Packaging Corp. CEO Mark Kowlzan expressed confidence in the company’s ability to navigate these challenges. He mentioned that they expect to see an improvement in daily shipments in the coming quarters, particularly in the paper segment due to back-to-school shipments. However, they anticipate lower prices in both packaging and paper segments.
The market responded positively to Packaging Corp.’s strong earnings, with the company’s stock surging by 11% to $153.63. This increase marks the largest percentage gain since March 2020 and positions Packaging Corp. as the top performer in the S&P 500 on Tuesday.
Although the earnings beat expectations, the company fell short of revenue estimates, reporting $1.95 billion instead of the anticipated $1.99 billion, as reported by FactSet.