Valued at $17.2 billion by market cap, Packaging Corporation of America (PKG), based in Lake Forest, Illinois, operates as a leading U.S. producer of containerboard and corrugated packaging. Operating through its Packaging and Paper segments, PKG provides essential products like shipping containers and protective packaging to industries such as food, beverages, and industrial goods.

The packaging giant has notably underperformed the broader market over the past year. PKG stock has gained 5.8% over the past 52 weeks and plunged 15.3% on a YTD basis, compared to the S&P 500 Index’s ($SPX) 10.2% surge over the past year and 1.3% dip in 2025.

Narrowing the focus, PKG stock has also underperformed the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 21.2% rally over the past 52 weeks and 6.1% decline on a YTD basis.

Despite reporting better-than-expected financials, PKG stock prices observed a marginal dip in the trading session after the release of its Q1 results on Apr. 22. The company’s packaging sales experienced a solid boost during the quarter, leading to its net sales growing 8.2% year-over-year to $2.1 billion, surpassing the Street’s expectations by a thin margin. Meanwhile, driven by a favorable pricing mix, its margins observed a significant expansion. This led to its adjusted EPS soaring 34.3% year-over-year to $2.31, exceeding the consensus estimates by 4.5%. Following the initial dip, PKG stock prices rose 2.2% in the subsequent trading session.

For the current fiscal year 2025, ending in December, analysts expect PKG to deliver a 12.8% year-over-year growth in adjusted EPS to $10.20. The company has a mixed earnings surprise history. While it surpassed the Street’s bottom-line estimates in three of the past four quarters, it missed the estimates on one other occasion.

Among the eight analysts covering the PKG stock, the consensus rating is a “Moderate Buy.” That’s based on five “Strong Buys” and three “Holds.”

This configuration is notably less bullish than a month ago, when six analysts gave “Strong Buy” recommendations.

On May 9, Wells Fargo (WFC) analyst Gabe Hajde downgraded PKG to an “Equal Weight” rating and reduced the price target from $205 to $180.

As of writing, PKG’s mean price target of $216.25 represents a 13.4% premium to current price levels, while the street-high target of $245 suggests an impressive 28.5% upside potential.