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How Did Sonoco Products Perform in 3Q16?

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Price movement

Sonoco Products (SON) has a market cap of $5.1 billion. It fell 0.06% to close at $51.05 per share on October 20, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 1.9%, -3.8%, and 27.9%, respectively, on the same day.

SON is trading 0.72% below its 20-day moving average, 1.1% below its 50-day moving average, and 8.4% above its 200-day moving average.

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Related ETF and peers

The PowerShares S&P MidCap Low Volatility ETF (XMLV) invests 1.3% of its holdings in Sonoco. The ETF tracks a volatility-weighted index of 80 of the least volatile S&P MidCap 400 companies. The YTD price movement of XMLV was 12.6% on October 20.

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

  • WestRock (WRK): $11.9 billion
  • AptarGroup (ATR): $4.8 billion
  • Bemis (BMS): $4.7 billion

Performance of Sonoco Products in fiscal 3Q16

Sonoco Products reported fiscal 3Q16 net sales of $1.21 billion, a fall of 2.7% compared to $1.24 billion in fiscal 3Q15. Sales from its consumer packaging, display and packaging, and paper and industrial converted products segments fell 0.35%, 19.0%, and 0.75%, respectively. Sales from its protective solutions segment rose 1.5% in fiscal 3Q16 compared to fiscal 3Q15.

The company’s gross profit margin and EBIT (earnings before interest and tax) margin rose 100 bps (basis points) and 230 bps, respectively, in fiscal 3Q16 compared to the prior year’s period.

Its net income and EPS (earnings per share) rose to $65.4 million and $0.64, respectively, in fiscal 3Q16 compared to 43.9 million and $0.43, respectively, in fiscal 3Q15.

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SON’s cash and cash equivalents and inventories fell 12.7% and 2.4%, respectively, in fiscal 3Q16 compared to fiscal 4Q15. Its current ratio rose to 1.7x, and its long-term debt-to-equity ratio fell to 0.65x in fiscal 3Q16 compared to 1.4x and 0.66x, respectively, in fiscal 4Q15. It reported free cash flow of $85.2 million in fiscal 3Q16, a rise of 52.4% compared to fiscal 3Q15.

Quarterly dividend

Sonoco Products has declared a regular quarterly dividend of $0.37 per share on its common stock. The dividend is payable on December 9, 2016, to shareholders of record as of November 11, 2016.

Projections

Sonoco Products has projected EPS of $0.60–$0.65 for 4Q16. The company made the following projections for 2016:

  • EPS of $2.70–$2.75
  • effective tax rate of 31.0%
  • Free cash flow of ~$140.0 million

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

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