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syy891013

Global Packaging Demand Fall. PKG Short

Short
Packaging Corporation of America (NYSE:PKG)  
syy891013  
NYSE:PKG   Packaging Corporation of America
Fundamental Analysis
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fundamental
PKG
- Deterioration in operation conditions as a result of general economic conditions and customers lowering their inventories.
- This has resulted in lower demand and lower production, which is continuing into 2023 and has negatively affected profitability.
- Published containerboard prices have decreased beginning in the fourth quarter of 2022, which will result in lower prices and lower profitability.
- Cost of wood fibre remains high.
- The market for communication papers competes heavily with electronic data transmission and document storage alternative. Increasing shifts to these alternatives have reduced usage of traditional print media and communication papers.
- For the first quarter of 2023, in the Packaging segment, corrugated products demand on a per day basis is expected to be similar to fourth quarter of 2022 levels.
- Prices for containerboard and corrugated products are expected to decrease as a result of the recent decreases in the published domestic containerboard prices, and prices for containerboard in export markets are epxected to be lower as
well.
- Slightly higher paper prices on flat sales volume is expected.
- Labour costs and certain indirect costs will increase as some containerboard mill operations were temporarily idled during the fourth quarter and resumed operations during the first quarter.
- Higher labour and benefits costs and other timing-related expenses that occur at the beginning of a new year as well as higher prices for many chemicals, particularly starch and caustic soda are anticipated.
- Higher interest and non-operating pension expenses and a higher tax rate are expected.
- First quarter of 2023 earnings expected to be lower than the fourth quarter of 2022.
- EPS and revenue forecast estimated to be lower. Earnings growth to be negative or flat for the year 2023 - 2024.

Outlook is not looking great for the year 2023 but stock price is still up. Compared to its competitor International Paper Company (Ticker: IP) the stock might have been over bought.
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