Packaging Corp Of America (PKG) receives a weak valuation score of 27 from InvestorsObserver's analysis. Our proprietary scoring system considers the overall health of the company by looking at the stock's price, earnings, and growth rate to determine if it represents a good value. PKG holds a better value than 27% of stocks at its current price. Investors who are focused on long-term growth through buy-and-hold investing will find the Valuation Rank especially relevant when allocating their assets.
Metrics Analysis
PKG has a trailing twelve month Price to Earnings (PE) ratio of 19.3 which places it around the histroical average of roughly 15. PKG is currently trading at a average value due to investors paying around what the stock is worth in relation to its earnings. PKG's trailing-12-month earnings per share (EPS) of 5.40 does justify its share price in the market. Trailing PE ratios don't factor in the company's projected growth rate, resulting in select firms having high PE ratios due to high growth potential enticing investors even when the underlying company has produced low earnings to date.
PKG currently has a 12-month-forward-PE-to-Growth (PEG) ratio of 4.04. The market is currently overvaluing PKG in relation to its projected growth due to the PEG ratio being above the fair market value of 1. PKG's PEG comes from its forward price to earnings ratio being divided by its growth rate. Due to the inclusion of more fundamentals of a company's overall health and a focus on the future rather than the past, PEG ratios are one of the most used valuation metrics by analysts today.
Summary
PKG' has a weak valuation at its current share price on account of a overvalued PEG ratio due to strong growth. PKG's PE and PEG are worse than the market average leading to a below average valuation score.
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