uploads/2016/07/son-pm-2.png

How Did Sonoco Products’s 2Q16 Earnings Turn Out?

By

Updated

Price movement

Sonoco Products (SON) has a market cap of $5.2 billion. It rose by 0.86% to close at $51.38 per share on July 21, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -0.16%, 7.4%, and 27.8%, respectively, on the same day.

SON is trading 3.4% above its 20-day moving average, 6.5% above its 50-day moving average, and 16.9% above its 200-day moving average.

Article continues below advertisement

Related ETF and peers

The PowerShares S&P Mid-Cap Low Volatility Portfolio ETF (XMLV) invests 1.3% of its holdings in Sonoco. The ETF tracks a volatility-weighted index of the 80 least volatile S&P Mid-Cap 400 companies. The YTD price movement of XMLV was 15.9% on July 21.

The market caps of Sonoco Products’s competitors are as follows:

  • WestRock Company (WRK) — $11.0 billion
  • AptarGroup (ATR) — $5.1 billion
  • Bemis Company (BMS) — $4.9 billion

Performance of Sonoco Products in fiscal 2Q16

Sonoco Products reported fiscal 2Q16 net sales of ~$1.2 billion, a fall of 3.4% compared to net sales of ~$1.3 billion in fiscal 2Q15. Sales from its Consumer Packaging, Display & Packaging, and Paper & Industrial Converted Products segments fell by 3.8%, 7.6%, and 3.5%, respectively.

Sales from its Protective Solutions segment rose by 2.8% in fiscal 2Q16 compared to fiscal 2Q15. The company’s gross profit margin rose by 4.3%, and its income before interest and taxes fell by 7.0% in fiscal 2Q16 compared to fiscal 2Q15.

Its net income and EPS (earnings per share) fell to $56.3 million and $0.55, respectively, in fiscal 2Q16 compared to $64.4 million and $0.63, respectively, in fiscal 2Q15.

Article continues below advertisement

SON’s cash and cash equivalents fell by 41.0%, and its inventories rose by 3.1% in fiscal 2Q16 compared to fiscal 4Q15. Its current ratio rose to 1.5x, and its long-term debt-to-equity ratio fell to 0.65x in fiscal 2Q16, compared to a current ratio and the long-term debt-to-equity ratio of 1.4x and 0.66x, respectively, in fiscal 4Q15. It reported free cash flow of $31.9 million in fiscal 2Q16, a fall of 0.93% compared to fiscal 2Q15.

Quarterly dividend

Sonoco Products has declared a quarterly dividend of $0.37 per share on its common stock. The dividend will be paid on September 9, 2016, to shareholders of record on August 12, 2016.

Projections

Sonoco Products has made the following projections for fiscal 3Q16 and 2016:

Fiscal 3Q16

  • EPS in the range of $0.65 to $0.70

Fiscal 2016

  • EPS in the range of $2.68 to $2.74
  • the effective tax rate of 31.5%
  • free cash flow of ~$140 million, which reflects operating cash flow of $490 million

Now we’ll discuss Skechers USA.

Advertisement

More From Market Realist