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Sonoco Products Announces Its 4Q16 Projections

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Price movement

Sonoco Products (SON) has a market cap of $5.3 billion. It fell 1.7% to close at $52.85 per share on December 2, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -3.1%, 6.8%, and 33.3%, respectively, on the same day.

SON is trading 0.11% above its 20-day moving average, 2.6% above its 50-day moving average, and 8.3% above its 200-day moving average.

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Related ETF and peers

The PowerShares S&P Mid-Cap Low Volatility Portfolio ETF (XMLV) invests 1.3% of its holdings in Sonoco. The YTD price movement of XMLV was 16.2% on December 2.

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

  • WestRock Company (WRK) — $12.8 billion
  • AptarGroup (ATR) — $4.6 billion
  • Bemis Company (BMS) — $4.6 billion

Performance of Sonoco Products in 3Q16

Sonoco Products (SON) reported fiscal 3Q16 net sales of $1.21 billion, a fall of 2.7% from the $1.24 billion reported in 3Q15. The company’s gross profit margin and EBIT[1. earnings before interest and tax] margin expanded 100 basis points and 230 basis points, respectively, between 3Q15 and 3Q16.

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

SON’s cash and cash equivalents and inventories fell 12.7% and 2.4%, respectively, between 4Q15 and 3Q16. It reported free cash flow of $85.2 million in 3Q16, a rise of 52.4% over 3Q15.

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Projections

Sonoco Products (SON) made the following projections for 4Q16:

  • GAAP EPS in the range of $0.95–$1.04
  • base EPS in the range of $0.60–$0.65

The company made the following projections for fiscal 2016:

  • GAAP EPS  in the range of $2.73–$2.82
  • base EPS in the range of $2.70–$2.75
  • cash from operations of ~$398 million
  • free cash flow of ~$61 million
  • capital investments of ~$190 million

It also made the following projections for fiscal 2017:

  • base EPS in the range of $2.68–$2.78
  • cash from operations of ~$470 million
  • free cash flow of ~$126 million

SON’s strategies

Currently, Sonoco Products (SON) is working with its customers to improve innovation in its packaging. The company is also planning to invest ~$50 million in product innovation in 2017.

The company also reported, “Sanders announced the store launch of the Company’s revolutionary alternative to traditional metal cans, called the TruVue® clean can. TruVue uses Sonoco’s patented Freshlock® technology and is made of a highly engineered, multilayer plastics substrate, allowing consumers to see the product inside.”

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

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