As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the industrial packaging industry, including Packaging Corporation of America (NYSE:PKG) and its peers.
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 9 industrial packaging stocks we track reported a satisfactory Q2. As a group, revenues missed analysts’ consensus estimates by 0.7% while next quarter’s revenue guidance was 2.3% below.
The Fed cut its policy rate by 50bps (half a percent) in September 2024, the first in roughly four years. This marks the end of its most pointed inflation-busting campaign since the 1980s. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be assessing whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
Thankfully, industrial packaging stocks have been resilient with share prices up 5.4% on average 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, also offering displays and protective packaging solutions.
Packaging Corporation of America reported revenues of $2.08 billion, up 6.3% year on year. This print exceeded analysts’ expectations by 2.5%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ volume estimates and a decent beat of analysts’ operating margin estimates.
Commenting on reported results, Mark W. Kowlzan, Chairman and CEO, said, “Results for the quarter reflect our strong market conditions in the Packaging segment. This drove a new all-time containerboard production record in order to service corrugated products and containerboard demand which grew stronger each month, ending with a new corrugated shipments-per-day record for the month of June.”
Interestingly, the stock is up 10.4% since reporting and currently trades at $212.90.
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Best Q2: Avery Dennison (NYSE:AVY) Founded as Kum Kleen Products, Avery Dennison (NYSE:AVY) is a manufacturer of adhesive materials, display graphics, and packaging products, serving various industries.
Avery Dennison reported revenues of $2.24 billion, up 6.9% year on year, outperforming analysts’ expectations by 1.9%. The business had a very strong quarter with an impressive beat of analysts’ organic revenue and operating margin estimates.
Avery Dennison achieved the fastest revenue growth among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 5.7% since reporting. It currently trades at $211.58.
Slowest Q2: Silgan Holdings (NYSE:SLGN) Established in 1987, Silgan Holdings (NYSE:SLGN) is a supplier of rigid packaging for consumer goods products, specializing in metal containers, closures, and plastic packaging.
Silgan Holdings reported revenues of $1.38 billion, down 3.2% year on year, falling short of analysts’ expectations by 3.4%. It was a softer quarter as it posted a miss of analysts’ organic revenue estimates.
Interestingly, the stock is up 5.4% since the results and currently trades at $51.37.
Sealed Air (NYSE:SEE) Founded in 1960, Sealed Air Corporation (NYSE: NYSE:SEE) specializes in the development and production of protective and food packaging solutions, serving a variety of industries.
Sealed Air reported revenues of $1.35 billion, down 2.6% year on year. This number topped analysts’ expectations by 2.9%. Overall, it was a very strong quarter as it also put up an impressive beat of analysts’ operating margin and volume estimates.
Sealed Air delivered the biggest analyst estimates beat among its peers. The stock is up 2% since reporting and currently trades at $35.09.
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 $4.73 billion, up 1.1% year on year. This result met analysts’ expectations. It was a very strong quarter as it also logged an impressive beat of analysts’ earnings and operating margin estimates.
The stock is up 6% since reporting and currently trades at $48.71.
This content was originally published on Stock Story
