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

Let's talk about the popular Packaging Corporation of America (NYSE:PKG). The company's shares led the NYSE gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Packaging Corporation of America’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Packaging Corporation of America

What's The Opportunity In Packaging Corporation of America?

Great news for investors – Packaging Corporation of America is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $198.67, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, Packaging Corporation of America’s share price is theoretically quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

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

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a negative profit growth of -9.7% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Packaging Corporation of America. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although PKG is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to PKG, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on PKG for a while, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Case in point: We've spotted 2 warning signs for Packaging Corporation of America you should be mindful of and 1 of them doesn't sit too well with us.

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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.