# Packaging Corporation of America (PKG) Sector: Containerboard and corrugated packaging | Field | Value | |---|---| | Price | $250.58 | | Market cap | $22B | | Intrinsic value source | Analysts | | Data as of | 2026-11-13 | | Next earnings | 2027-01-21 (estimate) | Analysts: Bullish Picks: Research only Discount category: Far above intrinsic value ## In short Investors pay a premium for the price increases and Greif mill gains of Packaging Corporation of America, and only prices that outrun rising freight and fiber costs through 2027 can earn this price. ## Themes and gap - Themes: Regulation and courts (regulation-legal), Weak consumer (weak-consumer) - Gap type: Can close (closable) - Why: The premium depends on 2027 earnings: the Q4 2026 report, expected in late January 2027, and the first 2027 quarters show whether price increases outrun costs. ## About Packaging Corporation of America (PCA) is based in Lake Forest, Illinois. It is the third largest producer of containerboard in North America and a leading producer of uncoated freesheet paper. It runs ten mills and 90 corrugated products plants and related facilities. It has two segments: Packaging, which makes containerboard and corrugated boxes and displays, and Paper. Net sales were $2,601.7 million in Q3 2026 and $7,459.3 million for nine months. PCA bought the containerboard business of Greif on September 2, 2025 for $1.8 billion in cash. The common stock trades on the NYSE in US dollars. PCA files 10-K and 10-Q reports. ## Thesis The price of PCA reflects a strong earnings run and the gains that it expects from higher containerboard prices and the Greif mills, and it depends on whether price rises outrun costs. Q3 2026 earnings excluding special items were $3.04 per share against $2.73 a year before, and the acquired Greif operations added $0.24 of the rise. In the legacy business, price and mix added $0.79 per share and higher costs took back $0.91. For the price to hold or rise, four things must be true. The announced containerboard and corrugated price increases must hold. Freight, recycled fiber, chemical and energy costs must stop rising faster than prices. The Greif mills must keep improving. The antitrust class action and the Justice Department subpoena must not lead to large costs. The Q4 2026 report, expected in late January 2027, with its first 2027 guidance, is the next test. If price rises fail or costs keep rising, the price can fall. ## Checkpoints - Jan 21, 2027 (estimate): Q4 2026 results and 2027 outlook. Status: Pending. Watch: Earnings excluding special items are at or above the guided $2.81 per share and the 2027 outlook shows prices holding, and this passes; earnings below $2.81 or weaker prices fail. ## Balance sheet - Cash: $762M - Debt: $4.0B - Net debt: $3.2B - Undrawn credit line: $573M At September 30, 2026, PCA had long-term debt of $3,969.7 million. Cash and cash equivalents were $534.6 million and marketable debt securities and other were $227.2 million, which is $761.8 million in all. Unused revolving credit, net of letters of credit, was $573 million. Net interest expense was $98.3 million for nine months. Capital spending was $617.9 million for nine months, and PCA expects $865 million to $890 million for 2026. It paid dividends of $356.9 million in nine months and has $224.3 million left in its share repurchase program. As of 2026-09-30. Sources: - https://www.sec.gov/Archives/edgar/data/75677/000119312526449161/pkg-20260930.htm - https://www.sec.gov/Archives/edgar/data/75677/000119312526428056/pkg-ex99_1.htm ## Dividends - Dividend yield: 2.2% (last 12 months, at the current price) - Paid per share, last 12 months: $5.50 (4 payments) - Current annual rate: $6.00 ($1.50 x 4 a year) - Payout ratio: 58% of the earnings of the last fiscal year (the year ended 2025-12-31) - Latest ex-dividend date: 2026-09-15, $1.50 per share - Growth from 2020 to 2025: 8.2% a year - Growth from 2015 to 2025: 8.6% a year Dividends per share by year: 2016: $2.36, 2017: $2.52, 2018: $3.00, 2019: $3.16, 2020: $3.37, 2021: $4.00, 2022: $4.75, 2023: $5.00, 2024: $5.00, 2025: $5.00. Source: company filings and market data, read on 2026-11-12. ## Recent events - 2026-10-21: PCA reported Q3 2026 results. Net income was $262 million, or $2.93 per share, and $3.04 per share excluding special items. Corrugated products shipments rose 10.6%, and fell 0.5% in the legacy business. PCA expects Q4 earnings of $2.81 per share excluding special items, with mill maintenance outage costs that are significantly higher. - 2026-09-30: In late September 2026, PCA received a grand jury subpoena from the Antitrust Division of the Department of Justice for documents about its business. It said that it is cooperating fully. - 2026-09-04: The court in the containerboard antitrust class action denied the joint motion to dismiss that PCA and the other defendants filed. PCA says that the claims have no merit and that it will defend the case. It cannot estimate a range of possible losses. PCA gave this news in its Q3 2026 10-Q, filed on November 5, 2026. - 2026-09-02: The board declared a regular quarterly dividend of $1.50 per share, paid on October 15, 2026. PCA had raised its annual dividend rate from $5.00 to $6.00 per share in Q2 2026. - 2025-12-03: PCA announced the permanent shutdown of the No. 2 paper machine and the kraft pulping facilities at its Wallula, Washington mill. The work finished in Q1 2026 and cost about $188.0 million before tax. ## Latest news and filings - Last earnings: 2026-10-22 (8-K: https://www.sec.gov/Archives/edgar/data/75677/000119312526428056/) - Next earnings: 2027-01-21 (expected; the company has not confirmed it) | Filed | Form | Headline | Period end | XBRL document | Link | | --- | --- | --- | --- | --- | --- | | 2026-11-05 | 10-Q | Quarterly report for the period ended Sep 30, 2026 | 2026-09-30 | pkg-20260930 | https://www.sec.gov/Archives/edgar/data/75677/000119312526449161/pkg-20260930.htm | | 2026-10-22 | 8-K | Earnings release | | pkg-20261021 | https://www.sec.gov/Archives/edgar/data/75677/000119312526428056/ | | 2026-08-07 | 10-Q | Quarterly report for the period ended Jun 30, 2026 | 2026-06-30 | pkg-20260630 | https://www.sec.gov/Archives/edgar/data/75677/000119312526339405/pkg-20260630.htm | | 2026-07-23 | 8-K | Earnings release | | pkg-20260722 | https://www.sec.gov/Archives/edgar/data/75677/000119312526312651/ | | 2026-05-13 | 8-K | Shareholder vote results | | | https://www.sec.gov/Archives/edgar/data/75677/000119312526221672/d148522d8k.htm | | 2026-05-08 | 10-Q | Quarterly report for the period ended Mar 31, 2026 | 2026-03-31 | pkg-20260331 | https://www.sec.gov/Archives/edgar/data/75677/000119312526213675/pkg-20260331.htm | | 2026-04-23 | 8-K | Earnings release | | pkg-20260422 | https://www.sec.gov/Archives/edgar/data/75677/000119312526171009/ | | 2026-03-03 | 8-K | Change of directors or officers | | | https://www.sec.gov/Archives/edgar/data/75677/000119312526087363/d118764d8k.htm | | 2026-02-26 | 10-K | Annual report for the period ended Dec 31, 2025 | 2025-12-31 | pkg-20251231 | https://www.sec.gov/Archives/edgar/data/75677/000119312526074129/pkg-20251231.htm | | 2026-01-28 | 8-K | Earnings release | | pkg-20260127 | https://www.sec.gov/Archives/edgar/data/75677/000119312526025053/ | Every filing on SEC EDGAR (CIK 75677): https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000075677&type=&dateb=&owner=include&count=40 ## Risks - High: Costs are rising. Higher costs, mainly labor, freight, corporate expense and fiber, took back $0.91 per share of the gains in the legacy business in Q3 2026. PCA expects freight, fiber, chemical and energy costs to rise further in Q4. - High: Antitrust cases are open. A purported class action in the Northern District of Illinois says that containerboard producers conspired to raise prices and seeks treble damages. On September 4, 2026, the court denied the defendants' motion to dismiss, so the case continues. PCA also got a Justice Department grand jury subpoena in late September 2026. PCA cannot estimate a loss. - Medium: Demand is mixed. Legacy corrugated shipments were 0.5% lower in Q3 2026, with weakness in agricultural end markets, and more e-commerce volume weakens the mix. - Medium: Debt grew with the Greif purchase. Long-term debt was $3,969.7 million at September 30, 2026, and net interest expense was $98.3 million for nine months against $45.2 million. - Medium: Mill operations affect output. Maintenance outages at three mills lower Q4 production, and PCA expects capital spending of $865 million to $890 million in 2026. ## Links - Page: https://picks.utilarium.app/company/PKG/ - History of changes: https://picks.utilarium.app/company/PKG/history/ - JSON with full history: https://picks.utilarium.app/data/company/PKG.json > Picks is a personal record of stock picks. It gives general opinions about stocks, including a "Top pick" label. They are not tailored to your needs, goals or risk tolerance. Kevin is not a registered adviser and relies on the general-advice exemption in Canadian securities law (NI 31-103 s.8.25). Do your own research, or ask a registered adviser. Kevin may hold any stock on this site. Prices, intrinsic values and ratings can be delayed or wrong; check the original source. Full disclaimer: /disclaimer/.