Investors looking for signs of life in the paper sector got a markedly mixed message on Wednesday evening from the earnings of Packaging Corp. of America (NYSE:PKG). This maker of paper packaging announced solid results for the fourth quarter and a nice dividend increase, but it forecast earnings for the March quarter at the very bottom of a rather wide range of analysts' estimates.

Even though Packaging Corp. won't have growth-fund managers falling over each other to buy shares, this year does represent the first since 2000 that the company was able to show year-over-year growth. It was also able to post net margins (after charges and gains) of more than 6% -- considerably better than the essentially zero margin of a year ago.

The way Packaging Corp.'s results seem to have bottomed out and are just starting their climb back up mirrors the entire industry's fortunes as of late. Unlike the steelmakers or energy producers, paper-company stocks have not really had a heyday or enjoyed the Wall Street love-in for commodities over the past 18 months. Look no further than International Paper's (NYSE:IP) being drummed out of the Dow Jones Industrials Index to find proof that paper is decidedly unattractive right now.

In broad terms, paper is suffering from the same problem that I highlighted in a piece on Alcoa (NYSE:AA): The cost of inputs -- in this case, energy, wood, and chemicals -- is rising about as rapidly as the end-user price. Stuck between a rock and a hard place, the efficient mills are limited in their ability to boost results.

In that sense, Packaging Corp. did provide a bit of good news: Demand appears to be picking up, and pricing continues to improve. That won't make every paper-company stock a winner, but mills such as UPM-Kymmene Oyj (NYSE:UPM), which can operate more efficiently than most and post solid growth, should see some brighter days ahead. After all, for as much as we hear about a paperless world, we're not there yet.

Fool contributor Stephen Simpson holds a CFA and has no ownership interest in any stocks mentioned.