PKG Fair Value Estimate
$168.3025.1% overvalued
Blended fair value estimate based on DCF, Graham Number, and earnings-based models.
Packaging Corp Of America
Exchange: NYSESector: Consumer CyclicalIndustry: Packaging & Containers
Packaging Corporation of America is a producer of containerboard in the United States. The Company's corrugated products manufacturing plants produce a variety of corrugated packaging products, including conventional shipping containers used to protect and transport manufactured goods, multi-color boxes and displays. In addition, it is a producer of meat boxes and wax-coated boxes for the agricultural industry. During the year ended December 31, 2012, the Company produced 2.6 million tons of containerboard at its mills. The Company's corrugated products manufacturing plants sold about 34.7 billion square feet. In 2012, it produced 1.6 million tons of kraft linerboard at its mills in Counce, Tennessee and Valdosta, Georgia, and one million tons of semi-chemical corrugating medium at its mills in Tomahawk, Wisconsin and Filer City, Michigan. In October 2013, the Company acquired Boise Inc.
Current Price
$224.59
+0.52%GoodMoat Value
$168.30
25.1% overvaluedProfile
Valuation (TTM)
Market Cap$20.04B
P/E27.04
EV$22.57B
P/B4.36
Shares Out89.21M
P/Sales2.17
Revenue$9.22B
EV/EBITDA13.12
Packaging Corp Of America (PKG) Valuation
GoodMoat Analysis
Packaging Corp Of America appears unfavourable from a value investing perspective, trading at a significant premium to its estimated intrinsic value. The current price offers a negative margin of safety, and its valuation multiples are high relative to its growth and profitability profile.
Read full analysis
The primary valuation assessment reveals a stark disconnect. The current stock price of $211.37 is 55% above the GoodMoat Target fair value estimate of $136.49. According to the framework's DCF-based Margin of Safety (MoS) bands, this represents a negative MoS, placing it firmly in the 'Unfavourable' category, which requires a MoS of at least 20% to be considered attractive. The stock's P/E of 24.8x is elevated, especially when contextualized against its 10.1% revenue growth and 8.6% profit margin. For a value investor, a P/E this high for a cyclical industrial company suggests the market is pricing in optimistic growth that may not materialize, offering no margin of safety. While the company demonstrates solid operational metrics like a 16.8% ROE, the valuation does not compensate for the inherent cyclicality of the packaging industry. The 3.8% FCF yield, while positive, is not sufficiently high to offset the premium price. In the framework's decision logic, the stock would fail the 'Valuation & Risk Gate' due to the lack of a positive margin of safety and an elevated multiple relative to fundamentals.
PKG Valuation Metrics
FCF$728.60M
FCF Growth Rate-1.71%
EPS Growth (CAGR)1.78%
WACC10.00%
Fair Value Models
Graham Number, PEG-based, and Earnings-based models
View Fair Value →PKG Valuation & Fair Value Analysis
Packaging Corp Of America (PKG) valuation analysis using multiple fair value methodologies. GoodMoat calculates a blended fair value target using discounted cash flow (DCF) analysis, the Graham Number, and earnings-based valuation models.
The GoodMoat Fair Value target for Packaging Corp Of America is $168.30. The current stock price is $224.59, suggesting the stock is 33.4% overvalued.
The price-to-earnings (P/E) ratio is 27.04. Price-to-book ratio is 4.36. Price-to-sales ratio is 2.17. Enterprise value to EBITDA is 13.12. PEG ratio is -1.75.
GoodMoat's valuation models include the Graham Number (based on EPS and book value), an earnings-based model (discounted future EPS), and a PEG-adjusted valuation. The three models are averaged to produce a blended fair value estimate. Use these tools alongside the DCF calculator and reverse DCF to form a comprehensive view of Packaging Corp Of America's intrinsic value.