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Deutsche Bank Downgrades Packaging Corporation of America

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Price movement

Packaging Corporation of America (PKG) has a market cap of $7.0 billion. It rose by 0.72% to close at $74.34 per share on July 22, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 0.42%, 9.0%, and 20.1%, respectively, on the same day. PKG is trading 7.3% above its 20-day moving average, 9.6% above its 50-day moving average, and 21.0% above its 200-day moving average.

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Related ETF and peers

The iShares Global Timber & Forestry ETF (WOOD) invests 3.8% of its holdings in PKG. The ETF tracks the 25 largest publicly listed companies that own or manage forests and timberlands. The YTD price movement of WOOD was 1.2% on July 22.

The market caps of PKG’s competitors are as follows:

  • International Paper (IP): $18.7 billion
  • WestRock (WRK): $11.0 billion
  • Domtar (UFS): $2.2 billion

PKG’s rating

Deutsche Bank has downgraded Packaging Corporation of America’s rating to “hold” from “buy.” It also set the stock price target at $75 from $73 per share. TheStreet Ratings rated the stock as a “buy” with a score of B+.

Performance of Packaging Corporation of America in 2Q16

Packaging Corporation of America reported 2Q16 net sales of $1.42 billion, a fall of 2.5% from the net sales of $1.45 billion in 2Q15. Sales of the packaging and paper segments fell by 1.5% and 5.1%, respectively, between 2Q15 and 2Q16. The company’s gross profit margin and income from operations rose by 3.4% and 1.3%, respectively.

Its net income and EPS (earnings per share) rose to $115.9 million and $1.23, respectively, in 2Q16, compared with $114.0 million and $1.16, respectively, in 2Q15. It reported EBITDA (earnings before interest, tax, depreciation, and amortization) excluding special items of $290.4 million in 2Q16, a rise of 1.1% from 2Q15. PKG’s capital spending fell by 20.2%, and its cash balance rose by 30.5% between 2Q15 and 2Q16. In the next part, we’ll discuss Skechers USA.

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