Packaging Corporation of America PKG reported third-quarter 2026 adjusted earnings of $3.04 per share, up 11.4% year over year and beating the Zacks Consensus Estimate of $2.95 by 3.05%. The bottom line also exceeded the company's guidance of $2.91, driven by favorable price and mix in the Packaging segment and contributions from the acquired Greif, Inc. GEF operations.
Including special items related to facility closures, the Wallula mill restructuring, acquisition and integration costs, and a corrugated products facility fire, earnings in the quarter were $2.93 per share compared with the prior-year quarter’s $2.51.
Net sales increased 12.5% year over year to $2.60 billion and beat the consensus estimate of $2.56 billion. Total corrugated products shipments rose 10.6% year over year, supported by the acquired operations.
Packaging Corporation of America Price, Consensus and EPS Surprise
Packaging Corporation of America price-consensus-eps-surprise-chart | Packaging Corporation of America Quote
Packaging Corp's Gross Profit Rises Y/Y in Q3
Gross profit increased 19.8% year over year to $604 million. The gross margin expanded to 23.2% from 21.8% in the prior-year quarter, reflecting stronger profitability despite higher operating costs.
Cost of sales increased 10.4% to $2 billion from $1.81 billion. Selling, general and administrative expenses rose 18.4% to $182.7 million. The company faced higher labor and operating expenses, increased corporate and other costs, and higher freight costs.
Adjusted operating income increased 13.4% year over year to $398 million. Adjusted EBITDA advanced 14.7% to $577 million, reflecting improved Packaging segment performance and contributions from the acquired Greif business.
PKG’s Q3 Segmental Performances
Packaging: Sales in this segment increased 13.4% year over year to $2.41 billion, aided by contributions from the acquired Greif business, higher production and sales volumes, and favorable price and mix. The figure beat our estimate of $2.30 billion. These gains were partly offset by higher labor and operating costs. Shipments per day at legacy corrugated products plants inched up 0.5%. Containerboard production was 1,489,000 tons.
Adjusted operating profit was $407.7 million compared with $347.9 million in the prior-year quarter, reflecting favorable price and mix, higher production and sales volumes, and contributions from the acquired Greif operations. Our model projected the segment’s adjusted operating income to be $394 million.
Paper: The segment’s revenues were $163.2 million in the July-September quarter, up 1.2% year over year. Our model projected the segment’s sales to be $174 million. Sales volume declined 2.5% from the third quarter of 2025.
The segment reported an operating profit of $29 million compared with the year-ago quarter’s $35.6 million. The decline was primarily due to higher maintenance outage expenses, partly offset by favorable price and mix. Our model projected the segment’s adjusted operating income to be $47 million.
Packaging Corp's Cash Position Declines Y/Y
PKG ended the quarter with $762 million in cash, cash equivalents and marketable debt securities, down from $807 million a year earlier.
The company generated net income of $262 million compared with $227 million in the prior-year quarter. Net interest expenses increased to $32.3 million from $19.3 million, creating an additional headwind to earnings.
PKG Provides Q4 Earnings Guidance
Packaging Corp expects fourth-quarter 2026 adjusted earnings of $2.81 per share, reflecting anticipated maintenance expenses and seasonal cost pressures.
The company expects lower seasonal volume and slightly higher prices in the Paper segment. Freight costs are also projected to increase with higher diesel fuel prices, while recycled fiber costs are expected to continue rising. These factors are expected to influence profitability despite the anticipated benefits from improved containerboard and corrugated products pricing.
Packaging Corp Stock’s Price Performance
The company’s shares have gained 14.5% in the past year compared with the industry’s growth of 4.5%.
PKG’s Zacks Rank
Packaging Corp currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Packaging Stocks Awaiting Results
Ball Corporation BALL is scheduled to release third-quarter 2026 results on Nov. 3. The Zacks Consensus Estimate for BALL’s third-quarter 2026 earnings is pegged at $1.06 per share, suggesting year-over-year growth of 3.9%.
The Zacks Consensus Estimate for Ball Corp’s top line is pegged at $3.74 billion, indicating growth of 10.6% from the prior-year reported figure.
Silgan Holdings Inc. SLGN is scheduled to release third-quarter 2026 results on Oct. 29. The Zacks Consensus Estimate for SLGN’s third-quarter 2026 earnings is pegged at $1.25 per share, implying a year-over-year dip of 2.5%.
The Zacks Consensus Estimate for Silgan Holdings’ top line is pegged at $2.07 billion, suggesting an increase of 3.1% from the prior-year reported figure.
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This article originally published on Zacks Investment Research (zacks.com).