What Happened?
Shares of packaging Corporation of America (NYSE:PKG) fell 5.4% in the afternoon session after a report from Bloomberg Intelligence indicated that demand for boxes was expected to weaken. The report, which surveyed managers, noted that box demand was forecasted to rise only 1.3% in December compared to the previous year. This was a decrease from a September forecast of a 1.6% increase. The revision marked the third consecutive month that sentiment from initial expectations had declined, raising concerns about future sales for the packaging company.
The shares closed the day at $192.55, down 5.3% from previous close.
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What Is The Market Telling Us
Packaging Corporation of America’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about 1 month ago when the stock dropped 3.8% on the news that the company reported third-quarter earnings that missed analyst expectations and issued weaker-than-expected guidance for the fourth quarter. The industrial products company posted earnings of $2.73 per share, which was $0.10 below the consensus estimate of $2.83. While sales and net income did increase compared to the same quarter in the previous year, the miss on profit expectations soured investor sentiment. Adding to the concerns, the company provided a forecast for the fourth quarter of $2.40 per share. This projection also fell short of the consensus analyst estimate of $2.63, signaling potential challenges ahead. The combination of a current earnings miss and a disappointing outlook for the next quarter prompted the stock's decline.
Packaging Corporation of America is down 15.1% since the beginning of the year, and at $191.19 per share, it is trading 21.9% below its 52-week high of $244.80 from December 2024. Investors who bought $1,000 worth of Packaging Corporation of America’s shares 5 years ago would now be looking at an investment worth $1,449.
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