As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q1. Today, we are looking at industrial packaging stocks, starting with Packaging Corporation of America (NYSE: PKG).
Industrial packaging companies have built competitive advantages from economies of scale that lead to advantaged purchasing and capital investments that are difficult and expensive to replicate. Recently, eco-friendly packaging and conservation are driving customers preferences and innovation. For example, plastic is not as desirable a material as it once was. Despite being integral to consumer goods ranging from beer to toothpaste to laundry detergent, these companies are still at the whim of the macro, especially consumer health and consumer willingness to spend.
The 8 industrial packaging stocks we track reported a satisfactory Q1. As a group, revenues beat analysts’ consensus estimates by 0.9%.
While some industrial packaging stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.2% since the latest earnings results.
Packaging Corporation of America (NYSE: PKG)
Founded in 1959, Packaging Corporation of America (NYSE: PKG) produces containerboard and corrugated packaging products as well as displays and package protection.
Packaging Corporation of America reported revenues of $2.14 billion, up 8.2% year on year. This print exceeded analysts’ expectations by 1.5%. Overall, it was a strong quarter for the company with a solid beat of analysts’ sales volume estimates and a decent beat of analysts’ adjusted operating income estimates.
Commenting on reported results, Mark W. Kowlzan, Chairman and CEO, said, “A new first quarter revenue record was achieved to begin the new year. In the Packaging segment we had excellent implementation of our previously announced price increases and, although we began to see some pullback in the middle of the quarter related to the uncertainty created by global trade tensions, box demand was solid and exceeded a very strong comparative period in last year’s first quarter. Outstanding operational performance and scheduled outage execution at our mills delivered record first quarter containerboard production to meet this demand, and we ended the quarter at targeted inventory levels. Our Paper segment continued to achieve impressive margins with both volume and prices slightly above original estimates. Across the Company, continued emphasis on operational efficiency, cost reduction initiatives, and capital project execution helped minimize the persistent inflation we see throughout most of our cost structure.”
Unsurprisingly, the stock is down 3.4% since reporting and currently trades at $180.
Is now the time to buy Packaging Corporation of America? Access our full analysis of the earnings results here, it’s free.
Best Q1: Crown Holdings (NYSE: CCK)
Formerly Crown Cork & Seal, Crown Holdings (NYSE: CCK) produces packaging products for consumer marketing companies, including food, beverage, household, and industrial products.
Crown Holdings reported revenues of $2.89 billion, up 3.7% year on year, outperforming analysts’ expectations by 1.5%. The business had a very strong quarter with an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.
The market seems happy with the results as the stock is up 8.2% since reporting. It currently trades at $97.10.
Is now the time to buy Crown Holdings? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: Graphic Packaging Holding (NYSE: GPK)
Founded in 1991, Graphic Packaging (NYSE: GPK) is a provider of paper-based packaging solutions for a wide range of products.
Graphic Packaging Holding reported revenues of $2.12 billion, down 6.2% year on year, in line with analysts’ expectations. It was a softer quarter as it posted full-year revenue guidance missing analysts’ expectations and full-year EBITDA guidance missing analysts’ expectations significantly.
Graphic Packaging Holding delivered the slowest revenue growth and weakest full-year guidance update in the group. As expected, the stock is down 13.6% since the results and currently trades at $21.85.
Read our full analysis of Graphic Packaging Holding’s results here.
International Paper (NYSE: IP)
Established in 1898, International Paper (NYSE: IP) produces containerboard, pulp, paper, and materials used in packaging and printing applications.
International Paper reported revenues of $5.90 billion, up 27.8% year on year. This result lagged analysts' expectations by 1.5%. It was a softer quarter as it also logged a miss of analysts’ Cellulose Fibers revenue estimates and a significant miss of analysts’ adjusted operating income estimates.
International Paper scored the fastest revenue growth but had the weakest performance against analyst estimates among its peers. The stock is down 7.8% since reporting and currently trades at $43.88.
Read our full, actionable report on International Paper here, it’s free.
Ball (NYSE: BALL)
Started with a $200 loan in 1880, Ball (NYSE: BLL) manufactures aluminum packaging for beverages, personal care, and household products as well as aerospace systems and other technologies.
Ball reported revenues of $3.10 billion, up 7.8% year on year. This print beat analysts’ expectations by 6.7%. It was a stunning quarter as it also put up a solid beat of analysts’ organic revenue and adjusted operating income estimates.
Ball achieved the biggest analyst estimates beat among its peers. The stock is down 2.3% since reporting and currently trades at $50.66.
Read our full, actionable report on Ball here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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