Growth is good, but
is better. The latter tells you that business is really picking
Packaging Corp. of America (
), or PCA, has delivered accelerating top- and bottom-line growth
in recent quarters. It also pays an above-market dividend.
Earnings growth has picked up for three straight quarters
(from 8% to 26% to 28% to 53%) for the maker of containerboard,
corrugated containers and packaging supplies. Sales growth ramped
up in the past two periods (7%, 8%, 13%).
From its Q4 results given in January, PCA's adjusted profit
jumped 53% to 61 cents a share -- the best in seven quarters.
Helped by higher selling prices, revenue grew 13% to $736.6
million. That marked its first double-digit year-over-year gain
in nearly two years.
PCA has had a rocky annual earnings history. In the past five
years, earnings fell in two years and was flat in one. It has a
three-year Earnings Stability Factor of 19 and a five-year
Stability Factor of 26.
Analysts see its full-year profit rising 39% to $2.87 a share
this year. It was recently revised higher.
During hard economic times in 2009, PCA slashed its quarterly
dividend to 15 cents a share from 30 cents a share. But the
company has since raised its payout to shareholders in recent
years. In January, PCA increased its annualized dividend by 25%
to $1.25 a share.
PCA has a yield of about 2.9%, higher than the 2.48% for the
S&P 500. It has the third-highest yield in the Paper &
Paper Products group.
The stock is near a record high after a second rebound off its
10-week moving average. It cleared a 37.06 buy point from a
second-stage flat base in December.
Mutual fund ownership of the stock has grown sharply in the
past three quarters.