The Zacks Containers - Paper and Packaging industry will continue to benefit from increasing packaging requirements due to the rise in e-commerce activities and steady demand from consumer-oriented end markets, such as food and beverages, and healthcare. Also, the rising demand for sustainable and eco-friendly packaging options due to increasing environmental concerns will continue to drive the industry’s growth. Pricing actions implemented by industry players will help offset the impacts of the rising cost ...

Industry Overview - The Zacks Containers - Paper and Packaging industry is experiencing weak demand due to lower consumer spending amid inflation, but pricing actions by industry players are expected to mitigate the impacts of supply-chain disruptions and elevated costs [1][4] - The industry is supported by rising e-commerce activities and increasing demand for sustainable packaging options due to environmental concerns [1][5] Market Dynamics - The industry has faced volume declines as consumers reduce spending and inventory levels, impacting top-line performance [4] - Supply-chain disruptions and higher costs for materials, labor, and transportation, along with tariffs, are adding pressure on margins [4] - Companies are implementing pricing strategies and cost-reduction actions to counter these challenges [4] Growth Opportunities - E-commerce is a significant growth catalyst, with global e-commerce revenues projected to grow at a CAGR of 18.9% from 2024 to 2030, and the U.S. market at 16.4% [5] - The industry has over 60% exposure to consumer-oriented markets, ensuring stable demand for packaging solutions across economic cycles [5] Environmental Trends - There is a growing preference for eco-friendly biodegradable packaging materials, driven by increased consumer awareness of environmental issues [6] - The industry is adopting new technologies and incorporating recycled content into production methods to enhance sustainability [6] Industry Performance - The Zacks Containers - Paper and Packaging industry ranks 155 out of 247 Zacks industries, placing it in the bottom 37% [7][8] - The industry has underperformed compared to its sector and the S&P 500, declining 9.7% over the past year, while the sector grew by 10.7% and the S&P 500 gained 16.1% [10] Current Valuation - The industry is currently trading at a trailing 12-month EV/EBITDA ratio of 20.84, higher than the S&P 500's 18.07 and the Industrial Products sector's 19.71 [13] - Over the past five years, the industry has traded between 17.53X and 28.12X, with a median of 21.29X [18] Company Highlights - **Greif (GEF)**: Aims for adjusted EBITDA of $1 billion by fiscal 2027, with a focus on higher-margin offerings and cost elimination initiatives [19][20] - **Brambles (BXBLY)**: Reported a 3% revenue growth to $4.9 billion in the first nine months of fiscal 2025, with expectations of 4-5% growth for the fiscal year [23][24] - **AptarGroup (ATR)**: Sees healthy demand in its Pharma segment and aims to expand through acquisitions, with a focus on resilient markets [27][28]

Industry Overview - The Zacks Containers - Paper and Packaging industry is experiencing weak demand due to lower consumer spending amid inflation, but pricing actions by industry players are expected to mitigate the impacts of supply-chain disruptions and elevated costs [1][4] - The industry is supported by rising e-commerce activities and increasing demand for sustainable packaging options due to environmental concerns [1][5] Market Dynamics - The industry has faced volume declines as consumers reduce spending and inventory levels, impacting top-line performance [4] - Supply-chain disruptions and higher costs for materials, labor, and transportation, along with tariffs, are adding pressure on margins [4] - Companies are implementing pricing strategies and cost-reduction actions to counter these challenges [4] E-commerce Impact - E-commerce accounted for over 19% of global retail sales in 2023, with revenues projected to reach $4.3 trillion by 2025, growing at a CAGR of 8% from 2025 to 2029 [5] - The U.S. online retail market is expected to exceed $1.5 trillion by 2026, while China's e-commerce market is projected to reach $2 trillion by 2027 [5] - The industry has significant exposure (over 60%) to consumer-oriented markets, ensuring stable demand for packaging solutions [5] Eco-Friendly Trends - There is a growing preference for biodegradable packaging materials driven by increased consumer awareness of environmental issues [6] - The industry is adopting new technologies and innovative products to meet this demand, including incorporating recycled content into production [6] Industry Performance - The Zacks Containers - Paper and Packaging industry ranks 149 out of 246 Zacks industries, placing it in the bottom 39% [8][9] - The industry has underperformed the S&P 500, declining 13.3% over the past year compared to the S&P 500's growth of 9.1% [10] Valuation Metrics - The industry is currently trading at a forward 12-month EV/EBITDA ratio of 19.76X, higher than the S&P 500's 12.88X and the Industrial Products sector's 19.30X [13] - Over the last five years, the industry has traded between 16.28X and 24.25X, with a median of 20.60X [16] Company Highlights - **Brambles (BXBLY)**: Reported a 1% year-over-year revenue increase to $4.9 billion, with expectations of 4-5% revenue growth in fiscal 2025 and underlying profit growth of 8-11% [17][18] - **AptarGroup (ATR)**: The Pharma segment is seeing healthy demand for drug delivery systems, with a focus on acquisitions to expand technology and market presence [22][23] - **Amcor (AMCR)**: Recently merged with Berry Global, expecting $260 million in pre-tax synergies in fiscal 2026 and projected annual cash flow exceeding $3 billion by FY28 [26][27]