Whereas Packaging Company Of America (NYSE: PKG) didn’t come proper out and say it, the tendencies in eCommerce are serving to to drive this enterprise to new highs.
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Packaging Company Of America Cashes In On eCommerce
Whereas Packaging Company Of America (NYSE: PKG) didn’t come proper out and say it, the tendencies in eCommerce are serving to to drive this enterprise to new highs. And we’re not stunned. eCommerce was rising at a double-digit clip earlier than the pandemic and has solely accelerated within the time since. And which means packing containers, heaps and numerous packing containers, however there’s extra to the story. Whereas the pandemic spurred using packing containers it reduce down on using paper. Our society is extra digitized than ever and utilizing much less and fewer paper every single day. That is why Packaging Company Of America’s choice to re-configure one in all its vegetation to cardboard was such one. And why the Q1 outcomes are so good.
Packaging Company Of America Blows Previous The Consensus
Packaging Company of American blew previous its consensus targets and that’s saying one thing. There hasn’t been a lot exercise within the analyst’s group over the previous month or so however almost each analyst masking the inventory issued an improve, value goal improve, or replace within the wake of the final report. That mentioned, the $1.81 billion in income is up 5.8% from final yr and that may be a comparatively troublesome comp that additionally beat the consensus by 500 foundation factors. The prior yr’s Q1 noticed income fall about 1.4% however that decline was in keeping with enterprise situations and never influenced by COVID.
The beneficial properties had been pushed by a 6.6% improve within the Packaging phase that was offset by minor weak point within the paper phase. Packaging gross sales had been pushed by a rise in quantity coupled with a positive value/combine. The worth/combine was bolstered by strategic value will increase which might be slated to proceed within the coming quarters.
Packaging gross sales had been impacted by timing as properly, there was one much less day within the 2021 interval which, when adjusted for, places each day gross sales at up 8.8%. Packaging gross sales had been additionally aided by the reconfiguring of a mill to cardboard and that reconfiguration is quick changing into everlasting. Wanting ahead, we will anticipate the packaging phase to proceed working at or close to full capability for a while to come back. Stock of corrugated cardboard is at a report seasonal low with quantity demand solely anticipated to rise into the top of the yr.
Transferring down, the rise in quantity led to a considerable quantity of cost-leveraging that was solely partially offset by larger freight and logistics prices. On the underside line, the GAAP EPS grew $0.26 from final yr to $1.75 and beat the consensus by $0.30. On an adjusted foundation, the $1.77 elevated by $0.27 or 18% to beat the consensus by $0.32.
Packaging Company Of America Is A Excessive-Yield Dividend Grower
Packaging Company of America is a high-yield dividend payer and one with a optimistic outlook for dividend progress. The inventory yields almost 3.0% and the corporate is simply paying out 56% of its earnings. The corporate additionally has a fairly sturdy stability sheet and a historical past of intermittent dividend will increase so there’s precedent. The latest improve got here late in fiscal 2020 and was price a cool 27% to shareholders. If income progress continues to develop sequentially like we predict it’ll, there could possibly be one other double-digit improve in the direction of the top of fiscal 2021 as properly.
The Technical Outlook: Packaging Company Of America Is Prepared To Transfer Larger
Shares of PKG opened the session with just a little little bit of weak point however yield-hungry buyers shortly drove the value again up. Now it seems like the value motion is able to transfer up and retest the latest highs and escape to a brand new all-time excessive. The indications are in keeping with this outlook and present growing power in each the MACD and stochastic. Assuming value does escape to a brand new excessive we see this inventory shifting up $170 within the close to time period and probably as excessive as $250 throughout the subsequent 12 to 24 months.
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