Is Now An Opportune Moment To Examine Packaging Corporation of America (NYSE:PKG)?

By
Simply Wall St
Published
April 12, 2021
NYSE:PKG

Today we're going to take a look at the well-established Packaging Corporation of America (NYSE:PKG). The company's stock saw significant share price movement during recent months on the NYSE, rising to highs of US$147 and falling to the lows of US$129. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Packaging Corporation of America's current trading price of US$138 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Packaging Corporation of America’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Packaging Corporation of America

Is Packaging Corporation of America still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 4.4% below my intrinsic value, which means if you buy Packaging Corporation of America today, you’d be paying a fair price for it. And if you believe that the stock is really worth $144.23, then there’s not much of an upside to gain from mispricing. In addition to this, Packaging Corporation of America has a low beta, which suggests its share price is less volatile than the wider market.

What does the future of Packaging Corporation of America look like?

earnings-and-revenue-growth
NYSE:PKG Earnings and Revenue Growth April 12th 2021

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 50% over the next couple of years, the future seems bright for Packaging Corporation of America. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? It seems like the market has already priced in PKG’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on PKG, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. While conducting our analysis, we found that Packaging Corporation of America has 3 warning signs and it would be unwise to ignore them.

If you are no longer interested in Packaging Corporation of America, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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