Companies like Sonoco Products Company SON, Karat Packaging KRT and Ranpak Holdings Corp. PACK are set to gain from their efforts to capitalize on these trends.
About the Industry
The Zacks Containers - Paper and Packaging industry comprises companies that manufacture paper and plastic packaging products. The packaging solutions provided by the industry help protect and preserve products, extend the shelf life and cut down on wastage and loss across the wide and lengthy range of distribution channels. The products range from containerboard and corrugated packaging to flexible and rigid plastic packaging. Some companies manufacture dispensing pumps, closures, aerosol valves and applicators for the beauty, personal, home care and healthcare markets. The industry serves a wide array of markets, including food, beverage, food services and other consumer products, such as beauty, personal care and home care. They also cater to the chemical, agribusiness, medical, pharmaceutical, electronics and industrial markets, to name a few.
What's Shaping the Future of the Containers - Paper and Packaging Industry?
Industry Faces Weak Demand, High Costs & Tariff Pressures: The industry has been grappling with soft demand as elevated inflation, high interest rates and tariff-related uncertainties weigh on consumer spending. Customers have been lowering their inventory, which had built up in response to high demand and supply-chain issues. Producers had to announce downtime, curtailments and selective mill closures, which had an impact on their top-line performances. Meanwhile, persistent volatility in raw material costs, including paper pulp, recycled fiber, resins and chemicals, along with fluctuations in energy, freight and labor expenses, continues to pressure margins. The companies have been implementing pricing strategies and cost-reduction actions to negate these headwinds. They are also streamlining their operations and taking steps to realign with high-growth key markets to bolster their performance.
E-commerce Acts as a Key Catalyst: With rising e-commerce activities over the years, the importance of packaging has increased manifold as it maintains the integrity and durability of a product. Packaging also helps withstand the complex product delivery process. E-commerce is expected to surge due to rising Internet penetration, widespread smartphone adoption and the convenience of shopping online. Advancements in digital payments, logistics and personalization are making the online shopping experience faster, safer and more customer-centric. This presents a major growth opportunity for the Containers - Paper and Packaging industry. Also, the industry has significant exposure (more than 60%) to consumer-oriented end markets, such as food and beverages, as well as healthcare. Demand for packaging applications remains fairly stable for these sectors across economic cycles, thus ensuring consistent demand for packaging solutions.
Demand for Eco-Friendly Packaging to Aid Industry: The preference for environmentally friendly biodegradable packaging materials is seeing a steady rise globally, driven by customers’ increasing awareness of environmental issues. The industry is constantly striving to meet the same by adopting the latest technology and bringing innovative products. Industry players have begun incorporating recycled content into production methods. By maximizing recycling, the industry can implement environmentally and economically sustainable production methods.
Zacks Industry Rank Indicates Bleak Prospects
The Zacks Containers - Paper and Packaging industry is a 10-stock group within the broader Zacks Industrial Products sector. The industry currently carries a Zacks Industry Rank #214, which places it at the bottom 13% of the 245 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates weak prospects in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Despite the dim near-term prospects of the industry, we will present a few stocks that you may want to consider for your portfolio. However, it is worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Versus Broader Market
The Containers - Paper and Packaging industry has underperformed its sector and the S&P 500 over the past year. The industry has declined 5.2% against the sector’s growth of 22.9%. Meanwhile, the S&P 500 has gained 23.8%.
One-Year Price Performance
Industry's Current Valuation
The trailing 12-month EV/EBITDA ratio, a commonly used multiple for valuing Containers - Paper and Packaging companies, shows that the industry is currently trading at 11.07X compared with the S&P 500’s 18.69X and the Industrial Products sector’s trailing 12-month EV/EBITDA of 21.25X. This is shown in the charts below.
Enterprise Value/EBITDA (EV/EBITDA) Ratio TTM
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Enterprise Value/EBITDA (EV/EBITDA) Ratio TTM
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Over the last five years, the industry traded as high as 15.44X and as low as 10.01X, with the median at 11.87X.
3 Containers - Paper and Packaging Stocks to Keep an Eye on
Sonoco: The company is investing in its core consumer and industrial businesses to expand capacity and strengthen customer relationships. Sonoco remains focused on productivity improvement, standardization and cost control, including supply-chain and procurement actions as well as pricing actions to offset inflationary pressures. Its profitability initiatives delivered $8 million in recurring cost savings in first-quarter 2026, with at least $32 million expected for the full year. Management continues to target $150-$200 million in savings and roughly 200 basis points of adjusted EBITDA margin expansion over 2026-2028. Sonoco also remains committed to disciplined capital allocation, targeting about $2.5 billion in cumulative operating cash flow, capex of around 4% of sales and net leverage below 2.5x by the end of 2028, while supporting shareholder returns. Reflecting this confidence, the board approved its 43rd consecutive annual dividend increase, raising the payout 2% to $2.16 per share. SON shares have gained 21.7% in the past six months.
The Zacks Consensus Estimate for Hartsville, SC based Sonoco’s fiscal 2026 earnings remained unchanged in the past 60 days. The estimate indicates 1.75% year-over-year growth. SON has a trailing four-quarter earnings surprise of 0.12%, on average and an estimated long-term earnings growth of 8.2%. The company currently carries a Zacks Rank #2 (Buy).
Price & Consensus: SON
Karat Packaging: Last year, the company expanded its business to supply paper bags (a new category) to one of its largest national chain accounts. This business is projected to generate approximately $20 million in annual revenues, with further market share gains expected over the next few years, reinforcing KRT’s leadership in sustainable, eco-friendly foodservice products. The paper bag product category has been growing steadily, driving a year-over-year increase in eco friendly product sales of 16.9% in the first quarter of 2026. The company plans to expand its product pipeline, focusing on eco-friendly innovation to strengthen its competitive advantage. KRT’s growth will be supported by rising demand for sustainable products, increased food delivery and take-out consumption. KRT is ramping up its manufacturing capabilities to meet the growing demand and is implementing initiatives to significantly boost online sales. The growing preference for food delivery, take-out and at-home dining is another key catalyst. KRT shares have gained 43.8% in the past six months.
The Zacks Consensus Estimate for Karat Packaging’s 2026 earnings indicates year-over-year growth of 13%. The estimate has remained unchanged over the past 60 days. The Chino, CA-based company has a long-term estimated earnings growth of 13% and a Zacks Rank #3 (Hold).
Price & Consensus: KRT
Ranpak Holdings: The company continues to focus on sustainable, differentiated, value-added packaging solutions while maintaining strict cost discipline to improve margins and drive profitable growth. Automation has emerged as a key growth driver, delivering record quarterly revenues in the fourth quarter of 2025. Momentum accelerated in the first quarter of 2026, with Automation net revenues surging 111% year over year. Protective Packaging Solutions (PPS) volumes have increased in 10 of the past 11 quarters. Ranpak is focused on capitalizing on e-commerce, automation, and sustainability tailwinds to drive growth and cash flow generation. In 2025, Ranpak partnered with Amazon and Walmart to provide sustainable protective packaging and Automation solutions. The company expects to generate more than $1 billion in revenues from these two customers over the next eight – 10 years. Earlier this year, Ranpak expanded its automation footprint through a partnership with Medline Industries, strengthening its presence in healthcare distribution. To support future growth, Ranpak expects capital expenditures to increase as it expands manufacturing capacity and upgrades its facilities and systems. PACK shares have gained 11.4% in the past six months.
The Zacks Consensus Estimate for Ranpak Holdings’ 2026 earnings indicates year-over-year growth of 44%. The estimate has remained unchanged over the past 30 days. The Concord Township, OH-based company currently carries a Zacks Rank of 3.
Price & Consensus: PACK
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See them now >>Sonoco Products Company (SON) : Free Stock Analysis Report
Ranpak Holdings Corp (PACK) : Free Stock Analysis Report
Karat Packaging Inc. (KRT) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
