Packaging Corp of AmericaLyondellBasell

Packaging Corp of America vs LyondellBasell

This page compares Packaging Corp of America and LyondellBasell, examining business models, financial performance, and market context in a neutral, accessible way. Educational content, not financial a...

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Green Packaging Investment Theme: 18 Stocks (2025)

Green Packaging Investment Theme: 18 Stocks (2025)

International Paper's $1.5 billion sale of its cellulose fibers unit signals a strategic pivot to its core sustainable packaging business. This move highlights a broader industry trend of portfolio optimization, creating potential growth opportunities for companies focused on eco-friendly packaging solutions and related industries.

Published: August 22, 2025

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Investment Analysis

Pros

  • Packaging Corporation of America is considered undervalued based on several valuation models, indicating potential upside for value-focused investors.
  • The company has delivered strong long-term stock returns, with a five-year total return of approximately 114%, outperforming many peers.
  • Recent acquisition expected to be immediately accretive to earnings, with synergy benefits projected within two years, supporting growth and efficiency.

Considerations

  • The stock has experienced recent volatility, including an 11.6% year-to-date decline and a short-term negative earnings surprise.
  • Profit margins and net income growth appear modest with net margin around 10% and a slight earnings per share miss in recent reports.
  • The company carries pro forma leverage of about 1.7 times due to acquisition-related debt, increasing financial risk in the near term.

Pros

  • LyondellBasell is the world’s largest polypropylene producer with extensive global operations, providing strong industry positioning.
  • The company shows solid profitability metrics with a normalized return on equity of 14% and return on assets near 5%.
  • Reasonable valuation multiples compared to peers, with a price-to-earnings ratio near 12 and price-to-book around 1.6, suggesting fair pricing.

Considerations

  • LyondellBasell’s business is sensitive to commodity cycles and petrochemical price volatility, exposing it to macroeconomic risks.
  • Liquidity ratios such as the quick ratio are below 1, indicating potential short-term liquidity pressures relative to peers.
  • Interest coverage ratio around 3 times suggests moderate debt service capacity, which could be a concern if earnings fluctuate significantly.

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