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Sonoco Products (SON)
NYSE:SON
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Sonoco Products
(NYSE:SON)
64Neutral
Positive Factors
Financial Stability
Leverage is set to return to approximately 3x due to solid returns on Sonoco's divested plastics businesses, indicating financial stability.
Portfolio Transformation
The pro forma portfolio of Sonoco is materially underappreciated, with an estimated 43% potential upside to the stock price.
Negative Factors
Financial Obligations
Funds from the TFP divestment will be used to offset Eviosys acquisition debt, indicating ongoing financial obligations.
Management Changes
Sudden change in the management team raises questions as the company did not specify the reason for the previous CFO's departure.
Sonoco Products (SON) vs. S&P 500 (SPY)
Market Cap
$4.35B
Dividend Yield5.07%
Average Volume (3M)901.28K
Price to Earnings (P/E)26.7
Beta (1Y)0.57
Revenue Growth-4.57%
EPS GrowthN/A
CountryUS
Employees28,000
SectorConsumer Cyclical
Sector Strength63
IndustryPackaging & Containers
Share Statistics
EPS (TTM)1.00
Shares Outstanding98,624,790
10 Day Avg. Volume1,001,036
30 Day Avg. Volume901,281
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.87
Price to Cash Flow (P/CF)2.90
P/FCF Ratio2.90
Enterprise Value/Market Cap2.70
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit10.30
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$60.14Price Target Upside39.02% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
Sonoco Products Business Overview & Revenue Model
Company DescriptionSonoco Products Company (SON) is a diversified global packaging leader that develops and manufactures a wide range of consumer, industrial, healthcare, and protective packaging products. With operations in over 30 countries, Sonoco serves a diverse array of industries including food and beverage, personal care, healthcare, and industrial products. Key offerings include rigid paper and plastic containers, flexible packaging, and industrial products such as tubes and cores.
How the Company Makes MoneySonoco Products Company generates revenue through the sale of packaging products and services across four primary business segments: Consumer Packaging, Industrial Paper Packaging, Protective Solutions, and Display and Packaging. The Consumer Packaging segment provides food and beverage containers and other consumer packaging solutions, while the Industrial Paper Packaging segment focuses on the production of paper-based tubes, cores, and reels. The Protective Solutions segment offers custom-engineered protective packaging solutions, and the Display and Packaging segment provides retail display and packaging services. Revenue is driven by long-term contracts and relationships with major consumer goods and industrial companies, supported by significant investments in technology and innovation to meet evolving customer needs.
Sonoco Products Financial Statement Overview
Summary
Sonoco Products is facing significant revenue and profit margin contractions, suggesting potential challenges in market demand or pricing power. Increased debt levels and reduced equity indicate higher financial risk, although cash flow conversion remains reasonable. The company's financial health shows stress, particularly in profitability and leverage.Income Statement
Sonoco Products shows a decrease in total revenue from $6.78B in 2023 to $5.31B in 2024, indicating a revenue decline of approximately 21.4%. Gross profit margin remains relatively stable at 21.5% in 2024 compared to 21.2% in 2023. However, net income significantly decreased, leading to a net profit margin of 3.1% in 2024, down from 7.0% in 2023. The EBIT and EBITDA margins also dropped significantly due to decreased earnings, highlighting potential profitability challenges.70
Positive
Balance Sheet
The company has increased its leverage with a debt-to-equity ratio of 3.21 in 2024, up from 1.38 in 2023, reflecting a significant rise in total debt. Stockholders' equity decreased, contributing to a lower equity ratio of 18.2% in 2024 compared to 33.7% in 2023. Return on equity is lower at 7.2% in 2024, down from 19.6% in 2023, indicating reduced effectiveness in generating profits from shareholders' equity.65
Positive
Cash Flow
Operating cash flow decreased slightly to $833.8M in 2024 from $882.9M in 2023, showing minor operational cash generation issues. Free cash flow also declined to $456.3M in 2024 from $519.8M in 2023, reflecting reduced cash available for discretionary purposes. The free cash flow to net income ratio is 2.78, indicating relatively strong cash conversion despite lower net income.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 5.31B | 6.78B | 7.25B | 5.59B | 5.24B | Gross Profit |
| 1.14B | 1.44B | 1.44B | 1.06B | 1.05B | EBIT |
| 326.58M | 715.79M | 675.40M | -64.69M | 487.76M | EBITDA |
| 610.97M | 1.09B | 1.10B | 142.09M | 586.00M | Net Income Common Stockholders |
| 163.95M | 474.96M | 466.44M | -93.55M | 207.46M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 431.01M | 151.94M | 227.44M | 170.98M | 564.85M | Total Assets |
| 12.51B | 7.19B | 7.09B | 5.09B | 5.28B | Total Debt |
| 7.30B | 3.35B | 3.47B | 1.61B | 1.70B | Net Debt |
| 6.87B | 3.20B | 3.25B | 1.44B | 1.14B | Total Liabilities |
| 10.22B | 4.76B | 5.02B | 3.22B | 3.37B | Stockholders Equity |
| 2.27B | 2.42B | 2.07B | 1.85B | 1.91B |
| Cash Flow | Free Cash Flow | |||
| 440.61M | 519.84M | 189.90M | 55.82M | 521.96M | Operating Cash Flow |
| 833.85M | 882.92M | 509.05M | 298.67M | 705.62M | Investing Cash Flow |
| -4.11B | -619.34M | -1.75B | -173.49M | -127.01M | Financing Cash Flow |
| 3.67B | -351.99M | 1.33B | -513.54M | -162.87M |
Sonoco Products Technical Analysis
Negative
43.26
Price Trends
45.68
Negative
46.91
Negative
49.15
Negative
Market Momentum
-0.38
Positive
44.65
Neutral
49.74
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SON, the sentiment is Negative. The current price of 43.26 is below the 20-day moving average (MA) of 44.01, below the 50-day MA of 45.68, and below the 200-day MA of 49.15, indicating a bearish trend. The MACD of -0.38 indicates Positive momentum. The RSI at 44.65 is Neutral, neither overbought nor oversold. The STOCH value of 49.74 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SON.
Sonoco Products Risk Analysis
Sonoco Products disclosed 32 risk factors in its most recent earnings report. Sonoco Products reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Sonoco Products Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $5.64B | 20.43 | 14.25% | 1.49% | -2.23% | -13.56% | |
69 Neutral | $4.83B | 13.75 | 17.12% | 4.00% | -1.65% | 18.38% | |
65 Neutral | $4.01B | 14.79 | 45.91% | 2.90% | -1.75% | -21.15% | |
64 Neutral | $4.35B | 26.73 | 5.52% | 5.07% | -4.57% | ― | |
63 Neutral | $6.45B | 9.91 | 22.72% | 1.62% | -6.59% | -7.81% | |
62 Neutral | $2.22B | ― | -69.06% | 10.78% | 4.42% | 70.21% | |
61 Neutral | $6.55B | 11.72 | 3.07% | 4.01% | 2.66% | -21.27% |
* Consumer Cyclical Sector Average
Performance Comparison
SON
Sonoco Products
43.26
-11.27
-20.67%
GPK
Graphic Packaging
21.37
-5.33
-19.96%
SEE
Sealed Air
27.31
-7.04
-20.49%
SLGN
Silgan Holdings
52.71
7.12
15.62%
REYN
Reynolds Consumer Products
22.83
-4.71
-17.10%
AMBP
Ardagh Metal Packaging
3.71
0.21
6.00%
Sonoco Products Earnings Call Summary
Earnings Call Date:Apr 29, 2025
(Q1-2025)
| % Change Since: -7.49%|
Next Earnings Date:Jul 17, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong growth in net sales, adjusted EBITDA, and consumer segment performance, alongside successful debt reduction and synergy savings from acquisitions. However, challenges in the industrial segment, slower volumes in some markets, and currency impact were notable lowlights.Q1-2025 Updates
Positive Updates
Record Top-Line and Adjusted EBITDA Performance
Net sales grew by 31% and adjusted EBITDA increased by 38%, with adjusted earnings up 23%, demonstrating strong top-line and EBITDA performance.
Consumer Segment Growth
Consumer segment adjusted EBITDA grew by 127%, driven by the Eviosys acquisition, strong volume mix from legacy metal and rigid paper can businesses, and a positive price-cost environment.
Debt Reduction and Balance Sheet Strengthening
Proceeds from the sale of the thermoform and flexible packaging business were used to reduce debt, achieving a net leverage of under 4x net debt to adjusted EBITDA.
Synergy Savings from Eviosys Integration
Integration efforts from the Eviosys acquisition produced strong synergy savings, with an expected $40 million in savings for 2025 on the way to a two-year target of $100 million.
U.S. Metal Packaging Performance
The U.S. metal packaging business witnessed a 10% organic volume mix improvement with strong growth in aerosols and food cans.
Dividend Increase
Sonoco's Board of Directors increased the quarterly dividend for the 42nd consecutive year, providing a strong yield of 4.6%.
Negative Updates
Industrial Segment Volume Decline
Volume in the industrial segment was down low single digits, with flat results in South America offset by lower volumes and the planned exit from industrial operations in China.
Challenges in European and Southeast Asian Markets
The rigid paper can business faced slower volumes in Europe and Southeast Asia, partly due to a large customer transition.
Unfavorable Currency Translation
Higher-than-expected interest expenses, taxes, and negative impact from currency translation partially offset the gains.
Industrial Sales Decrease
Industrial sales decreased by 6% to $558 million, impacted by lower volumes and unfavorable currency translation.
Company Guidance
In the recent earnings call, Sonoco provided an optimistic outlook for the fiscal year 2025. The company reported a 31% increase in net sales and a 38% rise in adjusted EBITDA for the first quarter. Despite challenges such as higher interest expenses and currency translation impacts, adjusted earnings grew by 23%. Key drivers included strong performance in the consumer packaging segment, which saw a 127% increase in adjusted EBITDA due to the Eviosys acquisition and favorable pricing dynamics. The industrial segment also improved, with a 6% rise in adjusted EBITDA. Sonoco reaffirmed its full-year guidance, projecting adjusted EPS between $6 and $6.20 and operating cash flow between $800 million and $900 million. Additionally, the company successfully integrated Eviosys and achieved significant debt reduction by using $1.56 billion in after-tax proceeds from a divestiture. The company aims to achieve $40 million in synergy savings in 2025, with a two-year target of $100 million, and maintains a strong focus on deleveraging, innovation, and customer value.Sonoco Products Corporate Events
M&A TransactionsBusiness Operations and Strategy
Sonoco Products Sells Packaging Units to TOPPAN
Positive
Apr 1, 2025
On April 1, 2025, Sonoco Products Company completed the sale of its Thermoformed and Flexibles Packaging business and its global Trident business to TOPPAN Holdings Inc. for $1.8 billion. The proceeds from this transaction will be used to reduce approximately $1.5 billion in debt, allowing Sonoco to focus on its sustainable metal and fiber packaging businesses, thereby improving its financial position and enabling further investments in these areas.
Executive/Board Changes
Sonoco Appoints Scott A. Clark to Board
Positive
Feb 13, 2025
On February 12, 2025, Sonoco Products announced the appointment of Scott A. Clark to its Board of Directors, expanding the board to twelve members. Clark, a former Michelin executive, brings extensive global management experience and will be a valuable asset in supporting Sonoco’s growth, particularly in important regions such as Europe. This strategic appointment reflects Sonoco’s commitment to strengthening its leadership and enhancing its market positioning.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.