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Sonoco Products (SON)
NYSE:SON
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Sonoco Products
(NYSE:SON)
Rating:70Outperform
Price Target:
$50.00
▲( 10.84% Upside)
Positive Factors
Organic Growth and Investment
Sonoco is well-positioned to grow organically with an emphasis on integrating new acquisitions and increasing capital expenditure to drive growth in its global metal food and aerosol business.
Synergy Realization
Synergy realization from integrating Eviosys is expected to bring growth opportunities and consolidation in metal cans.
Valuation and Upside Potential
The pro forma portfolio of Sonoco is materially underappreciated, with an estimated 43% potential upside to the stock price.
Negative Factors
Financial Guidance Concerns
There is noise around the guidance, and the timing of the $1.8B in gross TFP proceeds could have a large impact on full-year interest expenses.
Macroeconomic Risks
The fundamental backdrop is delicate, with persistent risks such as MAHA and GLP1.
Portfolio Uncertainty
The biggest uncertainty for the stock revolves around portfolio actions, both known and unknown.
Sonoco Products (SON) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.55B
Dividend Yield4.59%
Average Volume (3M)804.86K
Price to Earnings (P/E)30.0
Beta (1Y)0.59
Revenue Growth-4.58%
EPS Growth-61.14%
CountryUS
Employees23,400
SectorConsumer Cyclical
Sector Strength72
IndustryPackaging & Containers
Share Statistics
EPS (TTM)1.38
Shares Outstanding98,627,980
10 Day Avg. Volume718,217
30 Day Avg. Volume804,862
Financial Highlights & Ratios
PEG Ratio-4.38
Price to Book (P/B)1.81
Price to Sales (P/S)0.00
P/FCF Ratio73.22
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$58.00Price Target Upside28.57% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering7
Sonoco Products Business Overview & Revenue Model
Company DescriptionSonoco Products Company, together with its subsidiaries, manufactures and sells industrial and consumer packaging products in North and South America, Europe, Australia, and Asia. The company operates through two segments: Consumer Packaging and Industrial Paper Packaging. The Consumer Packaging segment round and shaped rigid paper containers; metal and peelable membrane ends and closures; thermoformed plastic trays and containers; printed flexible packaging; and global brand artwork management. The Industrial Paper Packaging segment provides fiber-based tubes, cones, and cores; fiber-based construction tubes; fiber-based protective packaging and components; wooden, metal, and composite wire and cable, as well as reels and spools; and recycled paperboard, corrugating medium, recovered paper, and material recycling services. Sonoco Products Company offers thermoformed rigid plastic trays and devices; custom-engineered molded foam protective packaging and components; temperature-assured packaging; injection molded and extruded containers, spools, and parts; retail security packaging, including printed backer cards, thermoformed blisters, and heat-sealing equipment; and paper amenities. The company sells its products in various markets, which include paper, textile, film, food, chemical, packaging, construction, and wire and cable. Sonoco Products Company was founded in 1899 and is headquartered in Hartsville, South Carolina.
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 shows moderate financial performance with strong revenue growth but low profitability margins. The balance sheet indicates high leverage, and cash flow management highlights strong operational cash generation but limited free cash flow.Income Statement
Sonoco Products shows moderate performance in revenue growth and profitability. The TTM data indicates a gross profit margin of 33.72% and net profit margin of 2.40%, reflecting a stable but low profitability profile. Revenue growth from the previous period is notable, signaling positive momentum. However, the EBIT margin of 5.97% and EBITDA margin of 8.87% suggest room for improvement in operational efficiency.74
Positive
Balance Sheet
The balance sheet presents a mixed financial position. The debt-to-equity ratio is relatively high at 98.52%, signaling potential leverage concerns. Return on equity stands at 6.22%, indicating moderate returns for shareholders. The equity ratio of 19.41% highlights a lower reliance on equity financing, which could increase financial risk.68
Positive
Cash Flow
Cash flow analysis reveals challenges in free cash flow generation with a recent decrease. The operating cash flow to net income ratio of 3.00 is strong and indicates efficient cash generation from operations. However, the free cash flow to net income ratio of 0.40 shows limited free cash flow relative to earnings, suggesting constraints on liquidity and reinvestment capacity.65
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 6.37B | 5.31B | 6.78B | 7.25B | 5.59B | 5.24B | Gross Profit |
| 2.15B | 1.14B | 1.44B | 1.44B | 1.06B | 1.05B | EBIT |
| 380.16M | 326.58M | 715.79M | 675.40M | -64.69M | 487.76M | EBITDA |
| 564.94M | 610.97M | 1.09B | 1.10B | 142.09M | 586.00M | Net Income Common Stockholders |
| 153.20M | 163.95M | 474.96M | 466.44M | -93.55M | 207.46M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 181.83M | 431.01M | 151.94M | 227.44M | 170.98M | 564.85M | Total Assets |
| 12.68B | 12.51B | 7.19B | 7.09B | 5.09B | 5.28B | Total Debt |
| 2.43B | 7.30B | 3.35B | 3.47B | 1.61B | 1.70B | Net Debt |
| 2.24B | 6.87B | 3.20B | 3.25B | 1.44B | 1.14B | Total Liabilities |
| 10.22B | 10.22B | 4.76B | 5.02B | 3.22B | 3.37B | Stockholders Equity |
| 2.46B | 2.27B | 2.42B | 2.07B | 1.85B | 1.91B |
| Cash Flow | Free Cash Flow | ||||
| 60.56M | 440.61M | 519.84M | 189.90M | 55.82M | 521.96M | Operating Cash Flow |
| 459.52M | 833.85M | 882.92M | 509.05M | 298.67M | 705.62M | Investing Cash Flow |
| -4.11B | -4.11B | -619.34M | -1.75B | -173.49M | -127.01M | Financing Cash Flow |
| 3.73B | 3.67B | -351.99M | 1.33B | -513.54M | -162.87M |
Sonoco Products Technical Analysis
Negative
45.11
Price Trends
44.85
Positive
45.68
Negative
48.22
Negative
Market Momentum
0.34
Negative
50.82
Neutral
51.80
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 45.11 is above the 20-day moving average (MA) of 44.85, above the 50-day MA of 44.85, and below the 200-day MA of 48.22, indicating a neutral trend. The MACD of 0.34 indicates Negative momentum. The RSI at 50.82 is Neutral, neither overbought nor oversold. The STOCH value of 51.80 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 (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $5.87B | 20.35 | 14.52% | 1.40% | 1.99% | -5.30% | |
73 Outperform | $4.66B | 13.91 | 16.30% | 4.08% | -0.97% | 1.45% | |
71 Outperform | $4.74B | 15.58 | 43.40% | 2.48% | -2.45% | -16.55% | |
71 Outperform | $2.30B | ― | -69.06% | 10.58% | 4.42% | 70.21% | |
70 Outperform | $4.55B | 29.97 | 5.54% | 4.59% | -4.58% | -61.14% | |
64 Neutral | $6.83B | 11.09 | 20.62% | 1.80% | -6.28% | -7.43% | |
62 Neutral | $6.88B | 11.26 | 2.78% | 3.93% | 2.65% | -22.00% |
* Consumer Cyclical Sector Average
Performance Comparison
SON
Sonoco Products
45.69
-12.33
-21.25%
GPK
Graphic Packaging
22.62
-4.96
-17.98%
SEE
Sealed Air
31.89
-4.47
-12.29%
SLGN
Silgan Holdings
54.45
8.43
18.32%
REYN
Reynolds Consumer Products
22.14
-5.38
-19.55%
AMBP
Ardagh Metal Packaging
3.85
0.45
13.24%
Sonoco Products Earnings Call Summary
Earnings Call Date:Apr 29, 2025
(Q1-2025)
| % Change Since: -2.38%|
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.
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.