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SON’s Paper-Based Tubes and Cores Just Got More Expensive


Nov. 20 2020, Updated 12:16 p.m. ET

Price movement

Sonoco Products (SON) has a market cap of $5.2 billion. It rose by 1.6% to close at $52.61 per share on September 2, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 2.2%, 3.9%, and 31.8%, respectively, on the same day.

SON is trading 2.4% above its 20-day moving average, 4.2% above its 50-day moving average, and 16.1% above its 200-day moving average.

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Related ETF and peers

The PowerShares S&P Mid-Cap Low Volatility 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 17.0% on September 2.

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

  • WestRock Company (WRK) — $12.2 billion
  • AptarGroup (ATR) — $4.9 billion
  • Bemis Company (BMS) — $5.0 billion

Latest news on Sonoco

Sonoco Products’ wholly owned subsidiary Sonoco-Alcore will increase its prices for paper-based tubes and cores by up to 8% due to a rise in raw material costs, depending on product category, to all customers in Europe. This rise in prices will be effective on shipments beginning on October 1, 2016.

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Performance of Sonoco Products in 2Q16

Sonoco Products reported 2Q16 net sales of ~$1.2 billion, a fall of 3.4% from its net sales of ~$1.3 billion in 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% between 2Q15 and 2Q16. The company’s gross profit margin rose by 4.3%, and its income before interest and taxes fell by 7.0%. Its net income and EPS (earnings per share) fell to $56.3 million and $0.55, respectively, in 2Q16, compared to $64.4 million and $0.63, respectively, in 2Q15.

SON’s cash and cash equivalents fell by 41.0%, and its inventories rose by 3.1% between 4Q15 and 2Q16. Its current ratio rose to 1.5x, and its long-term debt-to-equity ratio fell to 0.65x in 2Q16, compared to 1.4x and ~0.7x, respectively, in 4Q15. It reported free cash flow of $31.9 million in 2Q16, a fall of 0.93% from 2Q15.


Sonoco Products has projected EPS in the range of $0.65–$0.70 for 3Q16.

The company has made the following projections for 2016:

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

For an ongoing analysis of this sector, visit Market Realist’s Consumer Discretionary page.


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