As the Q1 earnings season wraps, let’s dig into this quarter’s best and worst performers in the industrial packaging industry, including Graphic Packaging Holding (NYSE:GPK) and its peers.
Industrial packaging companies have built competitive advantages from economies of scale that lead to advantaged purchasing and capital investments that are difficult and expensive to replicate. Recently, eco-friendly packaging and conservation are driving customers preferences and innovation. For example, plastic is not as desirable a material as it once was. Despite being integral to consumer goods ranging from beer to toothpaste to laundry detergent, these companies are still at the whim of the macro, especially consumer health and consumer willingness to spend.
The 8 industrial packaging stocks we track reported a satisfactory Q1. As a group, revenues beat analysts’ consensus estimates by 0.9%.
In light of this news, share prices of the companies have held steady as they are up 4% on average since the latest earnings results.
Weakest Q1: Graphic Packaging Holding (NYSE:GPK)
Founded in 1991, Graphic Packaging (NYSE:GPK) is a provider of paper-based packaging solutions for a wide range of products.
Graphic Packaging Holding reported revenues of $2.12 billion, down 6.2% year on year. This print was in line with analysts’ expectations, but overall, it was a softer quarter for the company with full-year revenue guidance missing analysts’ expectations.
Michael Doss, the Company's President and CEO said, "First quarter results fell short of our expectations in a challenging economic and consumer environment. Consumers are redoubling their efforts to find value as food prices continue to rise. Meanwhile, promotional activity is driving mix and brand switching, rather than incremental foot traffic and volume gains. Against that backdrop, we saw a small volume decline in the Americas business, but continued improvement in our International business. Leveraging our growing cost and quality advantage and the strength of our innovation portfolio, we continue to gain market position as we partner with customers in a rapidly changing market.
Graphic Packaging Holding Total Revenue
Graphic Packaging Holding delivered the slowest revenue growth and weakest full-year guidance update of the whole group. Unsurprisingly, the stock is down 13% since reporting and currently trades at $22.
Started with a $200 loan in 1880, Ball (NYSE:BLL) manufactures aluminum packaging for beverages, personal care, and household products as well as aerospace systems and other technologies.
Ball reported revenues of $3.10 billion, up 7.8% year on year, outperforming analysts’ expectations by 6.7%. The business had a stunning quarter with an impressive beat of analysts’ organic revenue and adjusted operating income estimates.
Ball Total Revenue
Ball achieved the biggest analyst estimates beat among its peers. The market seems content with the results as the stock is up 3.2% since reporting. It currently trades at $53.50.
Established in 1898, International Paper (NYSE:IP) produces containerboard, pulp, paper, and materials used in packaging and printing applications.
International Paper reported revenues of $5.90 billion, up 27.8% year on year, falling short of analysts’ expectations by 1.5%. It was a softer quarter as it posted a significant miss of analysts’ adjusted operating income and EPS estimates.
International Paper delivered the fastest revenue growth but had the weakest performance against analyst estimates in the group. Interestingly, the stock is up 1.4% since the results and currently trades at $48.28.
Established in 1987, Silgan Holdings (NYSE:SLGN) is a supplier of rigid packaging for consumer goods products, specializing in metal containers, closures, and plastic packaging.
Silgan Holdings reported revenues of $1.47 billion, up 11.4% year on year. This print came in 0.6% below analysts' expectations. Overall, it was a slower quarter as it also recorded a slight miss of analysts’ organic revenue estimates and a slight miss of analysts’ EBITDA estimates.
The stock is up 4.5% since reporting and currently trades at $54.80.
Founded as Kum Kleen Products, Avery Dennison (NYSE:AVY) is a manufacturer of adhesive materials, display graphics, and packaging products, serving various industries.
Avery Dennison reported revenues of $2.15 billion, flat year on year. This number was in line with analysts’ expectations. Zooming out, it was a slower quarter as it recorded EPS guidance for next quarter missing analysts’ expectations significantly and EPS in line with analysts’ estimates.
The stock is up 2.9% since reporting and currently trades at $180.10.
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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