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 Q2. Today, we are looking at industrial packaging stocks, starting with Avery Dennison (NYSE:AVY).
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.
Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate and future cuts (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.
Thankfully, industrial packaging stocks have been resilient with share prices up 5.7% on average since the latest earnings results.
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. This print exceeded analysts’ expectations by 1.9%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ organic revenue estimates.
“We delivered a strong second quarter, with significant earnings growth, driven by higher volume and productivity gains,” said Deon Stander, president and CEO.
Avery Dennison scored the fastest revenue growth of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 3.5% since reporting and currently trades at $216.52.
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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, outperforming analysts’ expectations by 2.5%. The business had a very strong quarter with an impressive beat of analysts’ volume estimates and a decent beat of analysts’ operating margin estimates.
The market seems happy with the results as the stock is up 8.9% since reporting. It currently trades at $210.
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 5.9% since the results and currently trades at $51.60.
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 $3.04 billion, down 2.2% year on year. This result was in line with analysts’ expectations. It was a strong quarter as it also recorded an impressive beat of analysts’ operating margin estimates and a solid beat of analysts’ earnings estimates.
The stock is up 22% since reporting and currently trades at $94.50.
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 result surpassed analysts’ expectations by 2.9%. It was a very strong quarter as it also produced an impressive beat of analysts’ operating margin and volume estimates.
Sealed Air achieved the biggest analyst estimates beat among its peers. The stock is up 4.6% since reporting and currently trades at $35.99.
This content was originally published on Stock Story
