Packaging Corp. (PKG) Up 6.7% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Packaging Corp. (PKG). Shares have added about 6.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Packaging Corp. due for a pullback? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for Packaging Corporation of America before we dive into how investors and analysts have reacted as of late.

Packaging Corp Q2 Earnings Beat Estimates on Record Shipments

Packaging Corp reported second-quarter 2026 adjusted earnings of $2.35 per share, down 5.2% year over year but beating the Zacks Consensus Estimate of $2.31. The bottom line also came above the company’s guidance of $2.33, driven by higher production and sales volumes, including contributions from the acquired Greif business. This was partially offset by lower price and mix in the packaging segment, and higher operating, freight and labor costs.

Including special items related to facility closures, the Wallula mill restructuring and acquisition and integration costs, earnings in the quarter were $2.15 per share compared with the prior-year quarter’s $2.67.

Packaging Corp’s Gross Profit Rises Y/Y in Q2

Sales increased 14.7% year over year to $2.49 billion and surpassed the consensus estimate of $2.40 billion by 3.6%. Total corrugated products shipments reached an all-time quarterly record, rising 24.3% both per day and in total from the prior-year quarter.

Gross profit increased 6.1% year over year to $512.5 million. However, the gross margin contracted to 20.6% from 22.2% as the cost of sales rose 17.1% to $1.98 billion. Selling, general and administrative expenses increased 17% to $179 million.

Adjusted operating income improved 1.4% year over year to $315 million. Adjusted EBITDA advanced 7.7% to $486 million, reflecting higher production and sales volumes in packaging and stronger paper segment results.

PKG’s Q2 Segmental Performances

Packaging: Sales in this segment increased 15.2% year over year to $2.31 billion, aided by higher production and sales volume, including contributions from the acquired Greif business. These gains were partly offset by unfavorable price and mix, along with higher labor, freight and operating costs.

Shipments per day at legacy corrugated products plants increased 4.1%. Containerboard production was 1,415,000 tons, while containerboard inventory increased 40,000 tons from the year-ago quarter due to the acquisition.

Adjusted operating profit was $328 million compared with $322 million in the prior-year quarter.

Paper: The segment’s revenues were $157 million in the April-June quarter, up 7.9% year over year. Sales volume increased 6.3% from the second quarter of 2025. 

The segment reported an operating profit of $34.3 million compared with the year-ago quarter’s $25.8 million. The improvement was supported by higher sales volume and favorable price and mix.

Packaging Corp's Cash Position Declines

PKG ended the quarter with $666.8 million in cash, cash equivalents and marketable debt securities, down from $955.9 million a year earlier. Capital spending increased to $205.9 million from $169.7 million.

For the first six months of 2026, capital expenditure totaled $370.6 million compared with $317.8 million in the prior-year period.

PKG Q3 Outlook

The company expects third-quarter 2026 adjusted earnings of $2.91 per share. The outlook assumes continued strong packaging demand, another sequential increase in corrugated products volume, and benefits from previously announced containerboard and corrugated product price increases.

PKG expects better operating performance across its containerboard mill system, although scheduled maintenance expenses will shift toward the paper segment. Freight costs and recycled fiber prices are expected to remain elevated, while higher mill production should increase chemical and electricity usage. PKG also anticipates lower paper volume but improved pricing and mix.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, Packaging Corp. has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock has a score of D on the value side, putting it in the bottom 40% for value investors.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Packaging Corp. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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This article originally published on Zacks Investment Research (zacks.com).

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