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Goldman Sachs Rated Packaging Corporation of America as ‘Sell’

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Price movement

Packaging Corporation of America (PKG) has a market cap of $7.6 billion. It fell 1.3% to close at $80.64 per share on September 22, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 0.76%, 5.4%, and 31.3%, respectively, on the same day.

PKG is trading 1.9% above its 20-day moving average, 5.7% above its 50-day moving average, and 26.8% 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. This ETF tracks the 25 largest publicly listed companies that own or manage forests and timberlands. The YTD price movement of WOOD was 5.5% on September 22.

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

  • International Paper (IP) — $19.7 billion
  • WestRock Company (WRK) — $12.2 billion
  • Domtar Corporation (UFS) — $2.4 billion

PKG’s rating

Goldman Sachs has initiated the coverage of Packaging Corporation of America’s rating to “sell” and also set the stock’s price target at $77.00 per share.

Performance of Packaging Corporation of America in 2Q16

Packaging Corporation of America (PKG) reported 2Q16 net sales of ~$1.4 billion, a fall of 2.5% compared to net sales of ~$1.5 billion in 2Q15. Sales of its Packaging and Paper segments fell 1.5% and 5.1%, respectively, in 2Q16 compared to 2Q15. The company’s gross profit margin and income from operations rose 3.4% and 1.3%, respectively, in 2Q16 compared to 2Q15.

Its net income and EPS (earnings per share) rose to $115.9 million and $1.23, respectively, in 2Q16, compared to $114.0 million and $1.16, respectively, in 2Q15. It reported EBITDA[1. earnings before interest, tax, depreciation, and amortization] excluding special items of $290.4 million in 2Q16, a rise of 1.1% compared to 2Q15.

PKG’s capital spending fell 20.2%, and its cash balance rose 30.5% in 2Q16 compared to 2Q15.

Next, we’ll look at Columbia Sportswear (COLM).

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