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Packaging Corporation of America (PKG)

Company Dividend Discount ModelIndustry: Packaging & ContainersSector: Consumer Cyclical

Valuation Snapshot

Stable Growth$110.66 - $179.52$141.56
Multi-Stage$139.46 - $152.52$145.87
Blended Fair Value$143.72
Current Price$217.93
Upside-34.05%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS8.48%11.05%5.005.004.684.233.343.332.992.652.412.24
YoY Growth---0.02%6.80%10.66%26.77%0.30%11.41%12.84%9.95%7.62%27.57%
Dividend Yield--2.52%2.65%3.37%2.71%2.48%3.83%2.91%2.35%2.63%3.70%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)893.30
(-) Cash Dividends Paid (M)449.40
(=) Cash Retained (M)443.90
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)178.66111.6667.00
Cash Retained (M)443.90443.90443.90
(-) Cash Required (M)-178.66-111.66-67.00
(=) Excess Retained (M)265.24332.24376.90
(/) Shares Outstanding (M)89.8089.8089.80
(=) Excess Retained per Share2.953.704.20
LTM Dividend per Share5.005.005.00
(+) Excess Retained per Share2.953.704.20
(=) Adjusted Dividend7.968.709.20
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate1.78%2.78%3.78%
Fair Value$110.66$141.56$179.52
Upside / Downside-49.22%-35.04%-17.63%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)893.30918.12943.63969.85996.801,024.491,055.23
Payout Ratio50.31%58.25%66.18%74.12%82.06%90.00%92.50%
Projected Dividends (M)449.40534.77624.54718.88817.99922.04976.09

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate1.78%2.78%3.78%
Year 1 PV (M)485.41490.17494.94
Year 2 PV (M)514.56524.72534.98
Year 3 PV (M)537.61553.62569.93
Year 4 PV (M)555.26577.40600.21
Year 5 PV (M)568.12596.58626.17
PV of Terminal Value (M)9,862.4710,356.5910,870.32
Equity Value (M)12,523.4213,099.0813,696.56
Shares Outstanding (M)89.8089.8089.80
Fair Value$139.46$145.87$152.52
Upside / Downside-36.01%-33.07%-30.01%

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