Packaging Corporation of America (NYSE: PKG) and Rock-Tenn (NYSE:RKT) are both industrial products companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, risk, dividends, institutional ownership, profitabiliy and analyst recommendations.

Valuation and Earnings

This table compares Packaging Corporation of America and Rock-Tenn’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Packaging Corporation of America $6.08 billion 1.69 $1.22 billion $5.19 21.02
Rock-Tenn N/A N/A N/A N/A N/A

Packaging Corporation of America has higher revenue and earnings than Rock-Tenn.

Insider & Institutional Ownership

88.3% of Packaging Corporation of America shares are owned by institutional investors. 1.2% of Packaging Corporation of America shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Packaging Corporation of America and Rock-Tenn, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Packaging Corporation of America 0 6 4 0 2.40
Rock-Tenn 0 0 0 0 N/A

Packaging Corporation of America currently has a consensus target price of $104.33, suggesting a potential downside of 4.35%. Given Packaging Corporation of America’s higher probable upside, equities analysts clearly believe Packaging Corporation of America is more favorable than Rock-Tenn.

Dividends

Packaging Corporation of America pays an annual dividend of $2.52 per share and has a dividend yield of 2.3%. Rock-Tenn does not pay a dividend. Packaging Corporation of America pays out 48.6% of its earnings in the form of a dividend. Packaging Corporation of America has increased its dividend for 6 consecutive years and Rock-Tenn has increased its dividend for 5 consecutive years.

Profitability

This table compares Packaging Corporation of America and Rock-Tenn’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Packaging Corporation of America 8.05% 28.31% 8.66%
Rock-Tenn 4.50% 9.99% 4.08%

Summary

Packaging Corporation of America beats Rock-Tenn on 10 of the 11 factors compared between the two stocks.

Packaging Corporation of America Company Profile

Packaging Corporation of America (PCA) is a producer of containerboard products and uncoated freesheet. The Company operates through three segments: Packaging, Paper, and Corporate and Other. The Packaging segment produces a range of corrugated packaging products. The Paper segment manufactures and sells a range of papers, including communication-based papers and pressure sensitive papers. The Company’s containerboard mills produces linerboard and semi-chemical corrugating medium, which are papers primarily used in the production of corrugated products. The Company’s corrugated products manufacturing plants produce a range of corrugated packaging products, including conventional shipping containers used to protect and transport manufactured goods, multi-color boxes and displays. The Company also produces packaging for meat, fresh fruit and vegetables, processed food, beverages, and other industrial and consumer products.

Rock-Tenn Company Profile

Rock-Tenn Company (Rock-Tenn) is an integrated manufacturer of corrugated and consumer packaging. The Company operates in operate locations in the United States, Canada, Mexico, Chile, Argentina, Puerto Rico and China. Rock-Tenn has three reportable business segments: Corrugated Packaging, consisting of its containerboard mills and its corrugated converting operations; Consumer Packaging, consisting of the Company’s coated and uncoated paperboard mills, consumer packaging converting operations and merchandising display facilities, and Recycling, which consists of its recycled fiber brokerage and collection operations.

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