DCF Studio

    PKG · NYQ · Consumer Cyclical

    Packaging Corporation of America

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 212.49

    Market price

    USD 258.64

    Implied upside

    -17.8%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedCapital expenditure runs at 8.2% of revenue against depreciation of 6.4%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 212.49-17.8%
    Exit multiple
    USD 315.63+22.0%
    Market price
    USD 258.64

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 10.1bnUSD 11.0bnUSD 11.9bnUSD 12.7bnUSD 13.5bnUSD 14.3bnUSD 15.0bnUSD 15.6bnUSD 16.1bnUSD 16.5bn+5.6%
    EBITUSD 1.5bnUSD 1.6bnUSD 1.8bnUSD 1.9bnUSD 2.0bnUSD 2.1bnUSD 2.2bnUSD 2.3bnUSD 2.4bnUSD 2.5bn+5.6%
    NOPATUSD 1.2bnUSD 1.3bnUSD 1.4bnUSD 1.5bnUSD 1.6bnUSD 1.7bnUSD 1.8bnUSD 1.8bnUSD 1.9bnUSD 1.9bn+5.6%
    Add depreciation & amortisationUSD 644.4mUSD 701.2mUSD 757.4mUSD 812.1mUSD 864.4mUSD 913.3mUSD 957.7mUSD 996.8mUSD 1.0bnUSD 1.1bn+5.6%
    Less capital expenditureUSD -830.9mUSD -908.9mUSD -986.9mUSD -1.1bnUSD -1.1bnUSD -1.2bnUSD -1.3bnUSD -1.3bnUSD -1.4bnUSD -1.4bn+6.2%
    Capex, % of revenue8.2%8.3%8.3%8.4%8.4%8.5%8.5%8.5%8.6%8.6%-
    Less increase in working capitalUSD -236.0mUSD -191.0mUSD -189.2mUSD -184.3mUSD -176.0mUSD -164.4mUSD -149.5mUSD -131.4mUSD -110.3mUSD -86.6m-10.5%
    Free cashflow to firmUSD 768.1mUSD 896.8mUSD 980.6mUSD 1.1bnUSD 1.1bnUSD 1.2bnUSD 1.3bnUSD 1.4bnUSD 1.4bnUSD 1.5bn+7.7%
    Discount factor0.96320.89350.82890.76900.71340.66180.61400.56960.52840.4902-
    Present valueUSD 739.8mUSD 801.3mUSD 812.8mUSD 818.6mUSD 818.5mUSD 812.3mUSD 800.3mUSD 782.6mUSD 759.6mUSD 731.8m-
    Present Value Of The ForecastUSD 7.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.847Reported 0.772, pulled toward 1.0 (Blume)
    Cost of equity8.48%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 15.9x interest cover. Book interest / average debt was lower, at 2.2%.
    Market capitalisationUSD 23.0bn84.1% of capital
    Total debtUSD 4.4bn15.9% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC7.79%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 212.49

    66% of EV

    Forecast FCFF, final year
    USD 1.5bn
    Capex at depreciation, working capital in reinvestment
    USD 1.9bn
    Less reinvestment at g/ROIC (19.0% of NOPAT)
    USD -370.3m
    Capitalised
    USD 1.6bn
    ROIC (reported)
    13.2%
    Terminal value, undiscounted
    USD 30.6bn
    Terminal value, discounted
    USD 15.0bn
    Enterprise value
    USD 22.9bn
    Less net debt
    USD 3.8bn
    Equity value
    USD 19.1bn

    Exit at 14.0x EBITDA

    Value per shareUSD 315.63

    75% of EV

    Terminal value, undiscounted
    USD 49.5bn
    Terminal value, discounted
    USD 24.3bn
    Enterprise value
    USD 32.1bn
    Less net debt
    USD 3.8bn
    Equity value
    USD 28.4bn

    Spread between methods: 39%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.79%325.50346.54374.58413.40470.05
    6.79%252.00261.89274.53291.02313.10
    7.79%202.12206.70212.49219.87229.39
    8.79%166.12167.94170.32173.41177.42
    9.79%138.97139.27139.84140.74142.03

    Outlined: this model. Green text: above today's price of 258.64. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year2.0%6.3%8.4%
    EBIT margin17.5%14.9%17.4%
    Discount rate-7.8%7.0%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.