PCA Earnings: Results Continue to Impress, but Management's Outlook Raises Investor Concern

No-moat-rated Packaging Corp. of America reported solid fourth-quarter results as it continued to experience strong demand for its packaging products. Net sales rose almost 11% year over year, driven by strength in the packaging segment, while consolidated operating margin expanded roughly 60 basis points. PCA maintained its momentum from last quarter and continued to push through industry headwinds. Management said higher open market prices and operating costs could weigh on results in the first quarter. Nevertheless, we've raised our fair value estimate to $144 per share from $140 to reflect higher near-term packaging volume growth in our forecast.