PKG
MaterialsPackaging Corporation of America
Price Chart
Market Data
Financials
XBRL · SEC EDGAR2009–2025(17yr)| Metric | FY 2009 | FY 2010 | FY 2011 | FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | FY 2018 | FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 | FY 2025Latest | YoY |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $2.1B | $2.4B | $2.6B | $2.8B | $3.7B | $5.9B | $5.7B | $5.8B | $6.4B | $7.0B | $7.0B | $6.7B | $7.7B | $8.5B | $7.8B | $8.4B | $9.0B | +7.2% |
| Gross Profit | $426.6M | $532.2M | $541.9M | $639.6M | $859.2M | $1.2B | $1.2B | $1.3B | $1.5B | $1.6B | $1.6B | $1.4B | $1.9B | $2.1B | $1.7B | $1.8B | $1.9B | +6.0% |
| Gross Margin | 19.9% | 21.9% | 20.7% | 22.5% | 23.4% | 21.0% | 21.0% | 22.1% | 22.8% | 23.5% | 23.6% | 20.6% | 24.2% | 24.7% | 21.8% | 21.3% | 21.0% | -0.2pp |
| Operating Income | $352.5M | $185.4M | $272.7M | $443.5M | $473.6M | $702.7M | $750.0M | $780.3M | $931.2M | $1.1B | $1.1B | $723.9M | $1.2B | $1.4B | $1.1B | $1.1B | $1.1B | +0.5% |
| Operating Margin | 16.4% | 7.6% | 10.4% | 15.6% | 12.9% | 12.0% | 13.1% | 13.5% | 14.4% | 15.2% | 15.1% | 10.9% | 16.1% | 16.8% | 13.8% | 13.1% | 12.3% | -0.8pp |
| Net Income | $265.9M | $205.4M | $158.0M | $163.8M | $436.3M | $392.6M | $436.8M | $449.6M | $668.6M | $738.0M | $696.4M | $461.0M | $841.1M | $1.0B | $765.2M | $805.1M | $774.1M | -3.9% |
| Net Margin | 12.4% | 8.4% | 6.0% | 5.8% | 11.9% | 6.7% | 7.6% | 7.8% | 10.4% | 10.5% | 10.0% | 6.9% | 10.9% | 12.1% | 9.8% | 9.6% | 8.6% | -1.0pp |
| Free Cash Flow | $191.9M | $29.7M | $65.3M | $275.7M | $373.8M | $315.9M | $448.1M | $526.9M | $513.1M | $628.7M | $807.9M | $611.6M | $489.0M | $670.8M | $845.4M | $521.5M | $728.6M | +39.7% |
| FCF Margin | 8.9% | 1.2% | 2.5% | 9.7% | 10.2% | 5.4% | 7.8% | 9.1% | 8.0% | 9.0% | 11.6% | 9.2% | 6.3% | 7.9% | 10.8% | 6.2% | 8.1% | +1.9pp |
| EPS (Diluted) | $2.60 | $2.00 | $1.57 | $1.68 | $4.47 | $3.99 | $4.47 | $4.75 | $7.07 | $7.80 | $7.34 | $4.84 | $8.83 | $11.03 | $8.48 | $8.93 | $8.58 | -3.9% |
1. THE BIG PICTURE
Packaging Corporation of America is transitioning from a steady regional operator into a more scaled player following its $1.8 billion cash acquisition of Greif’s containerboard business. While Packaging Corporation of America faces a structural decline in its paper business due to digital substitution, it is successfully positioning itself as the most efficient cash generator among its peers, outclassing larger rivals in converting sales into free cash flow.
2. WHERE THE RISKS HIT HARDEST
Packaging Corporation of America’s "proximity to customer" strategy, which keeps plants within a 150-mile radius to save on freight, is directly threatened by energy volatility. Manufacturing costs are highly sensitive to fuel; a mere $0.10 increase in natural gas prices adds $3 million in expenses (Risks). Furthermore, the operational flexibility to shift between fiber sources—a stated competitive strength—is tested by market pricing. A $10 per ton increase in recycled fiber costs results in a $20 million expense hit, potentially neutralizing the benefits of its integrated mill system (10-K Item 1, Risks). Finally, the Paper segment’s stability is precarious; while it battles the "digital substitution" of its products, it simultaneously faces a massive concentration risk with ODP Corporation, which accounts for 58% of the segment's sales (Risks).
3. WHAT THE NUMBERS SAY TOGETHER
Packaging Corporation of America leads its peer group with an 8.9% free cash flow (FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders) margin, yet recent results show the cost of its aggressive expansion. Net income for the most recent quarter fell to $102 million from $222 million a year prior, weighed down by "extended outages" at the Massillon mill and restructuring charges at the Wallula facility (8-K). While TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter revenue growth of 7.2% stands out against decliners like Dow (-7.0%) and LyondellBasell (-25.2%), this growth is largely inorganic. Actual corrugated shipments were slightly down in the fourth quarter, suggesting that the top-line boost is coming from the Greif acquisition rather than organic volume gains (8-K, XBRL). Short interest at 5.0% of the float indicates a segment of the market remains skeptical of this transition (Yahoo Finance).
4. IS IT WORTH IT AT THIS PRICE?
At 18.2x forward earnings, the market is pricing in approximately 3.9% long-term growth (CAPM analysis). This valuation represents a 14% premium to the peer median of 16.0x (XBRL). This premium is supported by Packaging Corporation of America’s superior profitability; its 14.4% operating margin is the second-highest in the group, trailing only PPG (XBRL).
However, the valuation is sensitive to any slowdown. If growth were to revert to a GDP-pace of 2.5%, the justified multiple would drop to 14.4x, implying significant downside from current levels (CAPM analysis). Investors are also accepting the lowest dividend yield in the peer group (2.2%) compared to yields as high as 7.2% at LyondellBasell, signaling that the stock is being held for its operational quality and growth through acquisition rather than immediate capital return (XBRL).
5. WHAT WOULD CHANGE THIS VIEW?
- Constructive if Packaging segment operating income returns toward 2024 levels ($297.2 million) as the Massillon mill outages conclude and Greif integration synergies begin to hit the bottom line (8-K).
- Cautious if the ODP Corporation contract is terminated or reduced, or if recycled fiber costs sustain a rise above the $10 per ton sensitivity threshold, which would trigger a $20 million annual expense increase (Risks).
6. BOTTOM LINE
Structural Advantage: A highly integrated regional manufacturing network that minimizes freight costs and allows for rapid shifting between softwood, hardwood, and recycled fiber sources.
Bottom Line: Packaging Corporation of America is a premier operator trading at a justified premium, but its near-term performance depends entirely on successfully digesting the Greif acquisition.
1. Top 5 Material Risks
- General Economic Conditions: A recession or economic downturn in the United States could lead to lower consumer spending and disposable income, reducing demand for Packaging Corporation of America products and negatively affecting earnings and cash flows.
- Industry Cyclicality: Prices for commodity packaging and paper products are volatile and driven by factors outside Packaging Corporation of America's control, such as industry capacity decisions and trade publications; if supply exceeds demand, earnings and operating cash flows are harmed.
- Competition: Packaging Corporation of America faces intense competition from producers of paper, plastic, wood, and metal packaging; failure to compete effectively on price, quality, or service could result in lost market share and lower sales prices.
- Cost of Fiber: Packaging Corporation of America is exposed to price volatility in wood and recycled fiber; a $10 per ton increase in recycled fiber costs for containerboard mills results in approximately $20 million of additional expense based on 2026 estimates.
- Cost of Purchased Fuels and Chemicals: Manufacturing costs are sensitive to energy prices; a $0.10 per million MMBTU increase in natural gas prices results in approximately $3 million of additional expense based on 2025 usage.
2. Company-Specific Risks
- Customer Concentration: ODP Corporation accounted for 58% of Paper segment sales and 4% of consolidated sales in 2025; the loss of this business or a failure to renew the agreement would require Packaging Corporation of America to find new customers, potentially at lower prices or higher costs.
- Acquisition Integration: The integration of the Greif, Inc. containerboard business involves significant time and resource diversion, and Packaging Corporation of America faces risks related to implementing its own systems to replace the seller's transition services.
- Labor Relations: Packaging Corporation of America’s workforce is highly unionized, and failure to successfully negotiate new collective bargaining agreements could lead to strikes or work stoppages that harm operations and financial results.
- Reliance on Personnel: Tight U.S. labor market conditions and the need to replace retiring employees at manufacturing facilities create risks of labor shortages and higher costs, which could adversely impact the ability to maintain facilities and serve customers.
3. Regulatory/Legal Risks
- Environmental Compliance: Packaging Corporation of America must comply with evolving air and water quality regulations; recent EPA particulate matter standards may increase capital expenditures and operating expenses to modify or replace boilers and other equipment.
- ESG Goals: Packaging Corporation of America has voluntarily established greenhouse gas emission targets; failure to achieve these goals or align with evolving stakeholder expectations could harm Packaging Corporation of America's reputation and result in higher costs with low returns on investment.
- Trade Policy: Changes in U.S. trade policy, including the imposition of tariffs or the termination of trade agreements, could impact global markets, demand for products, and the costs associated with capital investments.
4. Financial Impact Map
General Economic Conditions → Earnings and Operating Cash Flows → Potential reduction in demand and production levels due to recessionary pressures. Industry Cyclicality → Sales and Margins → Volatility in commodity packaging prices driven by industry capacity and macroeconomic conditions. Cost of Fiber → Manufacturing Costs → $20 million expense increase per $10 per ton rise in recycled fiber for containerboard mills. Cost of Purchased Fuels → Manufacturing Costs → $3 million expense increase per $0.10 per million MMBTU rise in natural gas prices. Customer Concentration → Paper Segment Sales → 58% of segment sales tied to a single customer (ODP) whose agreement expires December 31, 2026.
Recent Filings
| Form | Filed | Period |
|---|---|---|
| 10-K | Feb 2026 | Dec 2025 |
| 8-K | Jan 2026 | — |
| 10-Q | Nov 2025 | Sep 2025 |
| 14A | Mar 2025 | — |