PCA Should Benefit From Strong E-Commerce and Grocery Demand Amid Coronavirus Downturn

A decade of consolidation in the corrugated packaging industry has seen Packaging Corp. of America and its peers push more aggressively on prices, resulting in a period of sustained high margins. PCA played its part in the trend with the 2013 acquisition of Boise, boosting its market share to 10% in the process. We expect increased competitive intensity to diminish profitability for PCA and its peers in the long run. Thinning margins in corrugated packaging, which accounts for nearly 80% of PCA's sales, are likely to weigh on consolidated profit growth.