Intrinsic value of Packaging of America - PKG

Previous Close

$109.99

  Intrinsic Value

$198.53

stock screener

  Rating & Target

str. buy

+81%

  Value-price divergence*

+105%

Previous close

$109.99

 
Intrinsic value

$198.53

 
Up/down potential

+81%

 
Rating

str. buy

 
Value-price divergence*

+105%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of PKG stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 10.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  0.64
  9.70
  9.23
  8.81
  8.43
  8.08
  7.78
  7.50
  7.25
  7.02
  6.82
  6.64
  6.47
  6.33
  6.19
  6.08
  5.97
  5.87
  5.78
  5.71
  5.63
  5.57
  5.51
  5.46
  5.42
  5.37
  5.34
  5.30
  5.27
  5.25
  5.22
Revenue, $m
  5,779
  6,340
  6,925
  7,535
  8,169
  8,830
  9,516
  10,230
  10,971
  11,742
  12,543
  13,375
  14,242
  15,143
  16,081
  17,058
  18,076
  19,137
  20,244
  21,399
  22,604
  23,864
  25,180
  26,555
  27,994
  29,498
  31,073
  32,721
  34,446
  36,253
  38,146
Variable operating expenses, $m
 
  1,191
  1,294
  1,402
  1,513
  1,630
  1,751
  1,877
  2,007
  2,143
  2,284
  2,357
  2,510
  2,669
  2,834
  3,006
  3,185
  3,372
  3,568
  3,771
  3,984
  4,206
  4,437
  4,680
  4,933
  5,198
  5,476
  5,766
  6,070
  6,389
  6,722
Fixed operating expenses, $m
 
  4,104
  4,207
  4,312
  4,420
  4,530
  4,643
  4,759
  4,878
  5,000
  5,125
  5,254
  5,385
  5,520
  5,658
  5,799
  5,944
  6,093
  6,245
  6,401
  6,561
  6,725
  6,893
  7,066
  7,242
  7,423
  7,609
  7,799
  7,994
  8,194
  8,399
Total operating expenses, $m
  4,999
  5,295
  5,501
  5,714
  5,933
  6,160
  6,394
  6,636
  6,885
  7,143
  7,409
  7,611
  7,895
  8,189
  8,492
  8,805
  9,129
  9,465
  9,813
  10,172
  10,545
  10,931
  11,330
  11,746
  12,175
  12,621
  13,085
  13,565
  14,064
  14,583
  15,121
Operating income, $m
  780
  1,044
  1,424
  1,821
  2,236
  2,670
  3,122
  3,594
  4,086
  4,598
  5,133
  5,765
  6,347
  6,955
  7,589
  8,253
  8,946
  9,672
  10,431
  11,227
  12,060
  12,933
  13,849
  14,810
  15,818
  16,877
  17,988
  19,155
  20,382
  21,670
  23,025
EBITDA, $m
  1,138
  1,445
  1,854
  2,283
  2,731
  3,198
  3,686
  4,194
  4,724
  5,277
  5,853
  6,454
  7,080
  7,734
  8,417
  9,131
  9,877
  10,657
  11,474
  12,328
  13,224
  14,162
  15,146
  16,177
  17,260
  18,396
  19,588
  20,840
  22,156
  23,537
  24,989
Interest expense (income), $m
  88
  92
  106
  120
  135
  150
  166
  182
  200
  218
  236
  256
  276
  297
  318
  341
  364
  389
  415
  441
  469
  498
  529
  561
  594
  628
  665
  703
  743
  784
  828
Earnings before tax, $m
  689
  952
  1,318
  1,701
  2,102
  2,520
  2,956
  3,411
  3,886
  4,381
  4,897
  5,509
  6,071
  6,658
  7,271
  7,912
  8,582
  9,283
  10,017
  10,785
  11,591
  12,435
  13,320
  14,249
  15,224
  16,248
  17,323
  18,453
  19,639
  20,886
  22,197
Tax expense, $m
  239
  257
  356
  459
  567
  680
  798
  921
  1,049
  1,183
  1,322
  1,487
  1,639
  1,798
  1,963
  2,136
  2,317
  2,506
  2,704
  2,912
  3,129
  3,357
  3,596
  3,847
  4,111
  4,387
  4,677
  4,982
  5,303
  5,639
  5,993
Net income, $m
  450
  695
  962
  1,242
  1,534
  1,839
  2,158
  2,490
  2,837
  3,198
  3,575
  4,022
  4,432
  4,860
  5,308
  5,776
  6,265
  6,776
  7,312
  7,873
  8,461
  9,077
  9,724
  10,402
  11,114
  11,861
  12,646
  13,470
  14,337
  15,247
  16,204

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  239
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  5,777
  6,072
  6,633
  7,217
  7,825
  8,458
  9,115
  9,799
  10,509
  11,247
  12,014
  12,812
  13,641
  14,504
  15,403
  16,339
  17,314
  18,330
  19,390
  20,497
  21,652
  22,858
  24,119
  25,436
  26,814
  28,255
  29,763
  31,342
  32,994
  34,725
  36,538
Adjusted assets (=assets-cash), $m
  5,538
  6,072
  6,633
  7,217
  7,825
  8,458
  9,115
  9,799
  10,509
  11,247
  12,014
  12,812
  13,641
  14,504
  15,403
  16,339
  17,314
  18,330
  19,390
  20,497
  21,652
  22,858
  24,119
  25,436
  26,814
  28,255
  29,763
  31,342
  32,994
  34,725
  36,538
Revenue / Adjusted assets
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
  1.044
Average production assets, $m
  3,183
  3,493
  3,816
  4,152
  4,501
  4,865
  5,244
  5,637
  6,045
  6,470
  6,911
  7,370
  7,847
  8,344
  8,860
  9,399
  9,960
  10,544
  11,154
  11,791
  12,455
  13,149
  13,874
  14,632
  15,424
  16,254
  17,121
  18,029
  18,980
  19,976
  21,019
Working capital, $m
  1,071
  945
  1,032
  1,123
  1,217
  1,316
  1,418
  1,524
  1,635
  1,750
  1,869
  1,993
  2,122
  2,256
  2,396
  2,542
  2,693
  2,851
  3,016
  3,188
  3,368
  3,556
  3,752
  3,957
  4,171
  4,395
  4,630
  4,875
  5,132
  5,402
  5,684
Total debt, $m
  2,667
  3,022
  3,426
  3,846
  4,284
  4,740
  5,213
  5,705
  6,216
  6,748
  7,300
  7,874
  8,472
  9,093
  9,740
  10,414
  11,116
  11,848
  12,611
  13,408
  14,239
  15,108
  16,015
  16,964
  17,956
  18,994
  20,079
  21,216
  22,406
  23,652
  24,958
Total liabilities, $m
  4,017
  4,372
  4,776
  5,196
  5,634
  6,090
  6,563
  7,055
  7,566
  8,098
  8,650
  9,224
  9,822
  10,443
  11,090
  11,764
  12,466
  13,198
  13,961
  14,758
  15,589
  16,458
  17,365
  18,314
  19,306
  20,344
  21,429
  22,566
  23,756
  25,002
  26,308
Total equity, $m
  1,760
  1,700
  1,857
  2,021
  2,191
  2,368
  2,552
  2,744
  2,943
  3,149
  3,364
  3,587
  3,820
  4,061
  4,313
  4,575
  4,848
  5,132
  5,429
  5,739
  6,062
  6,400
  6,753
  7,122
  7,508
  7,911
  8,334
  8,776
  9,238
  9,723
  10,231
Total liabilities and equity, $m
  5,777
  6,072
  6,633
  7,217
  7,825
  8,458
  9,115
  9,799
  10,509
  11,247
  12,014
  12,811
  13,642
  14,504
  15,403
  16,339
  17,314
  18,330
  19,390
  20,497
  21,651
  22,858
  24,118
  25,436
  26,814
  28,255
  29,763
  31,342
  32,994
  34,725
  36,539
Debt-to-equity ratio
  1.515
  1.780
  1.840
  1.900
  1.960
  2.000
  2.040
  2.080
  2.110
  2.140
  2.170
  2.200
  2.220
  2.240
  2.260
  2.280
  2.290
  2.310
  2.320
  2.340
  2.350
  2.360
  2.370
  2.380
  2.390
  2.400
  2.410
  2.420
  2.430
  2.430
  2.440
Adjusted equity ratio
  0.275
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  450
  695
  962
  1,242
  1,534
  1,839
  2,158
  2,490
  2,837
  3,198
  3,575
  4,022
  4,432
  4,860
  5,308
  5,776
  6,265
  6,776
  7,312
  7,873
  8,461
  9,077
  9,724
  10,402
  11,114
  11,861
  12,646
  13,470
  14,337
  15,247
  16,204
Depreciation, amort., depletion, $m
  358
  400
  430
  462
  494
  528
  564
  601
  639
  678
  720
  689
  733
  780
  828
  878
  931
  985
  1,042
  1,102
  1,164
  1,229
  1,297
  1,367
  1,442
  1,519
  1,600
  1,685
  1,774
  1,867
  1,964
Funds from operations, $m
  800
  1,095
  1,393
  1,704
  2,029
  2,368
  2,722
  3,091
  3,475
  3,876
  4,294
  4,711
  5,165
  5,640
  6,136
  6,654
  7,195
  7,762
  8,355
  8,975
  9,625
  10,306
  11,021
  11,770
  12,555
  13,380
  14,246
  15,155
  16,110
  17,114
  18,168
Change in working capital, $m
  -1
  84
  87
  91
  95
  98
  102
  106
  110
  115
  119
  124
  129
  134
  140
  146
  152
  158
  165
  172
  180
  188
  196
  205
  214
  224
  235
  246
  257
  269
  282
Cash from operations, $m
  801
  1,012
  1,305
  1,613
  1,934
  2,270
  2,620
  2,985
  3,365
  3,762
  4,175
  4,586
  5,036
  5,506
  5,996
  6,508
  7,044
  7,604
  8,190
  8,803
  9,445
  10,119
  10,824
  11,565
  12,341
  13,156
  14,011
  14,910
  15,853
  16,845
  17,886
Maintenance CAPEX, $m
  0
  -297
  -326
  -357
  -388
  -421
  -455
  -490
  -527
  -565
  -605
  -646
  -689
  -733
  -780
  -828
  -878
  -931
  -985
  -1,042
  -1,102
  -1,164
  -1,229
  -1,297
  -1,367
  -1,442
  -1,519
  -1,600
  -1,685
  -1,774
  -1,867
New CAPEX, $m
  -285
  -311
  -322
  -336
  -350
  -364
  -378
  -393
  -409
  -425
  -441
  -459
  -477
  -497
  -517
  -538
  -561
  -585
  -610
  -636
  -664
  -694
  -725
  -758
  -793
  -829
  -868
  -908
  -951
  -996
  -1,043
Cash from investing activities, $m
  -770
  -608
  -648
  -693
  -738
  -785
  -833
  -883
  -936
  -990
  -1,046
  -1,105
  -1,166
  -1,230
  -1,297
  -1,366
  -1,439
  -1,516
  -1,595
  -1,678
  -1,766
  -1,858
  -1,954
  -2,055
  -2,160
  -2,271
  -2,387
  -2,508
  -2,636
  -2,770
  -2,910
Free cash flow, $m
  31
  404
  657
  920
  1,196
  1,485
  1,787
  2,101
  2,430
  2,772
  3,129
  3,482
  3,870
  4,276
  4,700
  5,142
  5,604
  6,088
  6,594
  7,124
  7,679
  8,261
  8,870
  9,510
  10,181
  10,885
  11,625
  12,402
  13,218
  14,075
  14,976
Issuance/(repayment) of debt, $m
  348
  382
  404
  421
  438
  455
  473
  492
  511
  531
  552
  574
  597
  621
  647
  674
  702
  732
  763
  797
  832
  869
  908
  949
  992
  1,038
  1,086
  1,137
  1,190
  1,246
  1,305
Issuance/(repurchase) of shares, $m
  -100
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  240
  382
  404
  421
  438
  455
  473
  492
  511
  531
  552
  574
  597
  621
  647
  674
  702
  732
  763
  797
  832
  869
  908
  949
  992
  1,038
  1,086
  1,137
  1,190
  1,246
  1,305
Total cash flow (excl. dividends), $m
  271
  786
  1,060
  1,341
  1,634
  1,940
  2,260
  2,593
  2,941
  3,304
  3,682
  4,056
  4,468
  4,897
  5,346
  5,816
  6,307
  6,820
  7,358
  7,921
  8,511
  9,129
  9,778
  10,459
  11,173
  11,923
  12,711
  13,538
  14,408
  15,321
  16,282
Retained Cash Flow (-), $m
  -127
  -152
  -157
  -164
  -170
  -177
  -184
  -191
  -199
  -207
  -215
  -223
  -232
  -242
  -252
  -262
  -273
  -285
  -297
  -310
  -323
  -338
  -353
  -369
  -386
  -404
  -422
  -442
  -463
  -485
  -508
Prev. year cash balance distribution, $m
 
  212
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  846
  903
  1,177
  1,464
  1,763
  2,076
  2,402
  2,742
  3,097
  3,467
  3,833
  4,235
  4,656
  5,095
  5,554
  6,034
  6,535
  7,061
  7,611
  8,187
  8,792
  9,425
  10,090
  10,787
  11,520
  12,288
  13,096
  13,945
  14,837
  15,774
Discount rate, %
 
  7.30
  7.67
  8.05
  8.45
  8.87
  9.32
  9.78
  10.27
  10.79
  11.32
  11.89
  12.49
  13.11
  13.77
  14.45
  15.18
  15.93
  16.73
  17.57
  18.45
  19.37
  20.34
  21.35
  22.42
  23.54
  24.72
  25.96
  27.25
  28.62
  30.05
PV of cash for distribution, $m
 
  788
  779
  933
  1,058
  1,153
  1,216
  1,250
  1,254
  1,232
  1,186
  1,114
  1,032
  939
  838
  733
  629
  529
  436
  351
  277
  213
  160
  118
  84
  58
  39
  26
  16
  10
  6
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Packaging Corporation of America manufactures and sells containerboard and corrugated packaging products in the United States, Europe, Mexico, and Canada. It operates through Packaging, Paper, and Corporate and Other segments. The company offers various corrugated packaging products, such as conventional shipping containers used to protect and transport manufactured goods, multi-color boxes and displays that help to merchandise the packaged product in retail locations, and honeycomb protective packaging. It also produces packaging for meat, fresh fruit and vegetables, processed food, beverages, and other industrial and consumer products. In addition, the company provides white papers comprising commodity and specialty papers with various features, such as colors, coatings, high brightness, and recycled content. Its white papers consist of communication papers, including cut-size office papers, and printing and converting papers; and pressure sensitive papers, such as release liners that are used to produce labels for use in consumer and commercially-packaged products. The company also produces market pulp. Packaging Corporation of America was founded in 1867 and is headquartered in Lake Forest, Illinois.

FINANCIAL RATIOS  of  Packaging of America (PKG)

Valuation Ratios
P/E Ratio 23
Price to Sales 1.8
Price to Book 5.9
Price to Tangible Book
Price to Cash Flow 12.9
Price to Free Cash Flow 20.1
Growth Rates
Sales Growth Rate 0.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -12.8%
Cap. Spend. - 3 Yr. Gr. Rate 3.7%
Financial Strength
Quick Ratio 9
Current Ratio 0
LT Debt to Equity 150%
Total Debt to Equity 151.5%
Interest Coverage 9
Management Effectiveness
Return On Assets 9.2%
Ret/ On Assets - 3 Yr. Avg. 8.3%
Return On Total Capital 10.7%
Ret/ On T. Cap. - 3 Yr. Avg. 10.6%
Return On Equity 26.5%
Return On Equity - 3 Yr. Avg. 27.2%
Asset Turnover 1
Profitability Ratios
Gross Margin 22.1%
Gross Margin - 3 Yr. Avg. 21.4%
EBITDA Margin 19.6%
EBITDA Margin - 3 Yr. Avg. 18.2%
Operating Margin 13.5%
Oper. Margin - 3 Yr. Avg. 12.9%
Pre-Tax Margin 11.9%
Pre-Tax Margin - 3 Yr. Avg. 11.3%
Net Profit Margin 7.8%
Net Profit Margin - 3 Yr. Avg. 7.4%
Effective Tax Rate 34.7%
Eff/ Tax Rate - 3 Yr. Avg. 35%
Payout Ratio 48%

PKG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PKG stock intrinsic value calculation we used $5779 million for the last fiscal year's total revenue generated by Packaging of America. The default revenue input number comes from 2016 income statement of Packaging of America. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our PKG stock valuation model: a) initial revenue growth rate of 9.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.3%, whose default value for PKG is calculated based on our internal credit rating of Packaging of America, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Packaging of America.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of PKG stock the variable cost ratio is equal to 18.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $4004 million in the base year in the intrinsic value calculation for PKG stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Packaging of America.

Corporate tax rate of 27% is the nominal tax rate for Packaging of America. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the PKG stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for PKG are equal to 55.1%.

Life of production assets of 10.7 years is the average useful life of capital assets used in Packaging of America operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for PKG is equal to 14.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1760 million for Packaging of America - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 93.013 million for Packaging of America is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Packaging of America at the current share price and the inputted number of shares is $10.2 billion.

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COMPANY NEWS

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▶ Packaging Corp. beats Street 1Q forecasts   [Apr-26-17 06:50PM  Associated Press]
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▶ Is Packaging Corp Of America (PKG) A Good Stock To Buy?   [Nov-29-16 01:36PM  at Insider Monkey]
Stock chart of PKG Financial statements of PKG
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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