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

Insider and Institutional Ownership

88.9% of Packaging Corporation of America shares are held by institutional investors. 1.2% of Packaging Corporation of America shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Rock-Tenn 4.50% 9.99% 4.08%
Packaging Corporation of America 8.05% 27.78% 8.62%

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Rock-Tenn N/A N/A N/A N/A N/A
Packaging Corporation of America $6.08 billion 1.70 $1.22 billion $5.19 21.26

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

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rock-Tenn 0 0 0 0 N/A
Packaging Corporation of America 0 6 5 0 2.45

Packaging Corporation of America has a consensus target price of $106.70, suggesting a potential downside of 3.32%. Given Packaging Corporation of America’s higher possible upside, analysts plainly 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. Rock-Tenn has increased its dividend for 6 consecutive years and Packaging Corporation of America has increased its dividend for 5 consecutive years.

Summary

Packaging Corporation of America beats Rock-Tenn on 9 of the 11 factors compared between the two stocks.

About Rock-Tenn

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.

About Packaging Corporation of America

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.

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