Financial Contrast: WestRock (WRK) vs. Packaging Corporation of America (PKG)

WestRock (NYSE: WRK) and Packaging Corporation of America (NYSE:PKG) are both large-cap basic materials companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, profitabiliy, valuation, risk and analyst recommendations.

Insider & Institutional Ownership

89.2% of WestRock shares are held by institutional investors. Comparatively, 88.3% of Packaging Corporation of America shares are held by institutional investors. 2.7% of WestRock shares are held by company insiders. Comparatively, 1.2% of Packaging Corporation of America shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility & Risk

WestRock has a beta of 1.37, suggesting that its stock price is 37% more volatile than the S&P 500. Comparatively, Packaging Corporation of America has a beta of 1.86, suggesting that its stock price is 86% more volatile than the S&P 500.

Valuation and Earnings

This table compares WestRock and Packaging Corporation of America’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
WestRock $14.31 billion 0.97 $2.15 billion $1.64 34.23
Packaging Corporation of America $6.08 billion 1.69 $1.22 billion $5.19 21.03

WestRock has higher revenue and earnings than Packaging Corporation of America. Packaging Corporation of America is trading at a lower price-to-earnings ratio than WestRock, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares WestRock and Packaging Corporation of America’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
WestRock 8.84% 13.27% 5.48%
Packaging Corporation of America 8.05% 27.78% 8.62%

Analyst Ratings

This is a summary of recent ratings and price targets for WestRock and Packaging Corporation of America, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
WestRock 0 2 8 1 2.91
Packaging Corporation of America 0 6 4 0 2.40

WestRock currently has a consensus target price of $62.22, indicating a potential upside of 10.83%. Packaging Corporation of America has a consensus target price of $104.33, indicating a potential downside of 4.43%. Given WestRock’s stronger consensus rating and higher probable upside, equities research analysts clearly believe WestRock is more favorable than Packaging Corporation of America.

Dividends

WestRock pays an annual dividend of $1.60 per share and has a dividend yield of 2.9%. Packaging Corporation of America pays an annual dividend of $2.52 per share and has a dividend yield of 2.3%. WestRock pays out 97.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Packaging Corporation of America pays out 48.6% of its earnings in the form of a dividend. Packaging Corporation of America has increased its dividend for 6 consecutive years.

Summary

WestRock beats Packaging Corporation of America on 11 of the 18 factors compared between the two stocks.

WestRock Company Profile

WestRock Company, incorporated on March 6, 2015, is a multinational provider of paper and packaging solutions for consumer and corrugated packaging markets. The Company also develops real estate in the Charleston, South Carolina region. The Company’s segments include Corrugated Packaging, Consumer Packaging, and Land and Development. The Corrugated Packaging segment consists of its containerboard mill and corrugated packaging operations, as well as its recycling operations. The Consumer Packaging segment consists of consumer mills, folding carton, beverage, merchandising displays, and partition operations. The Land and Development segment is engaged in the development and sale of real estate primarily in Charleston, South Carolina.

Packaging Corporation of America Company Profile

Packaging Corporation of America (PCA) is a producer of containerboard products and uncoated freesheet. The Company operates through three segments: Packaging, Paper, and Corporate and Other. The Packaging segment produces a range of corrugated packaging products. The Paper segment manufactures and sells a range of papers, including communication-based papers and pressure sensitive papers. The Company’s containerboard mills produces linerboard and semi-chemical corrugating medium, which are papers primarily used in the production of corrugated products. The Company’s corrugated products manufacturing plants produce a range of corrugated packaging products, including conventional shipping containers used to protect and transport manufactured goods, multi-color boxes and displays. The Company also produces packaging for meat, fresh fruit and vegetables, processed food, beverages, and other industrial and consumer products.

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