Can Packaging Corp. Of America Regain Its Footing?

Investors will get an idea of how the paper industry is faring when Packaging Corp. of America (NYSE:PKG) reports first-quarter results on Monday after the closing bell.

If analysts are on target, the company will see a sharp slowdown in the pace of both sales and earnings growth.

PCA, as it is called, is the fourth-largest producer of containerboard in the U.S. and North America's third-largest producer of uncoated free sheet paper, by production capacity. It runs eight mills and 100 corrugated products plants and related facilities.

PCA may be building a flat base with a buy point of 84.98, but has been trading under its 50-day moving average for nearly a month.

The company has logged 11 straight quarters of double-digit earnings growth. Analysts polled by Thomson Reuters see it breaking that streak, with first-quarter earnings staying flat with a year earlier at $1.08 a share. That would follow an 12% year-over-year gain in the prior quarter.

They expect a less than 1% year-over-year rise in Q1 revenue to $1.443 billion. That would be after a 12% year-over-year rise in Q4.

Vertical Research Partners analyst Chip Dillon says PCA management had given guidance that "many on Wall Street considered conservative" when it reported fourth-quarter results in January.

"I think (the reason) why analysts are not raising the numbers year-over-year is because (we saw) price weakness at the end of last year in their white paper business and there's been no price improvement in its main business — containerboard and corrugated boxes," he told IBD.

PCA is a part of IBD's Paper & Paper Products industry group. It ranks second in the group with a Composite Rating of 83 out of a possible 99. Mercer International (NASDAQ:MERC) leads the group with a Composite Rating of 89.