Great Things Come in Small Packageshttp://www.fool.com/investing/general/2013/12/07/great-things-come-in-small-packages.aspx Philip Saglimbeni
December 7, 2013
Packaging Corporation of America (NYSE: PKG) is a high-quality company operating in a typically boring industry, and therefore it often gets overlooked by many investors. As the fourth-largest manufacturer of containerboard and corrugated packaging products in the United States, the company has recently positioned itself to lead industry rivals like International Paper Company (NYSE: IP) and Rock-Tenn Company (NYSE: RKT) through aggressive revenue and earnings growth.
The data above indicates that the industry as a whole is growing earnings per share quite well. Packaging Corp. is the clear leader, with an expected earnings-per-share growth rate of 37.35% in 2014.
However, only Packaging Corp. is projected to grow revenue next year at an above-average pace. The company's robust revenue growth rate of 64.2% leads both International Paper and Rock-Tenn by an incredibly wide margin.
What's driving the growth?
However, the economy does not account for the drastic differences in growth between Packaging Corp. and competitors like Rock-Tenn and International Paper. The reason for the former's aggressive growth is its most recent acquisition of smaller shipping container rival Boise for approximately $2 billion, which included Boise's $714 million debt burden.
The acquisition, which was announced in September, was immediately accretive to earnings and increased the company's containerboard production capacity by 42%. The deal made Packaging Corp. the fourth largest producer of containerboard products in the United States and significantly expanded the company's global footprint.
Solid dividend history
Compared to competitors Rock-Tenn and International Paper, the company's dividend looks solid. Packaging Corp.'s dividend equals a yield of 2.60%, which is significantly better than Rock-tenn's yield of 1.5% and only slightly lower than International Paper's yield of 3.00%.
The one major negative is th