Education
About Us
Working with TipRanks
Follow Us
Sonoco Products (SON)
NYSE:SON
Top Page
Sonoco Products
(NYSE:SON)
68Neutral
Positive Factors
Earnings
Sonoco looks to be off to a good start on volumes and productivity.
Financial Performance
Sonoco announced an agreement to sell its Thermoformed and Flexibles Packaging business to TOPPAN Holdings for $1.8 billion on a cash-free and debt-free basis.
Growth Potential
Sonoco sees tremendous growth potential for paper solutions which are exploding throughout Europe.
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.
Portfolio Uncertainty
The biggest uncertainty for the stock revolves around portfolio actions, both known and unknown.
Sonoco Products (SON) vs. S&P 500 (SPY)
Market Cap
$4.53B
Dividend Yield4.52%
Average Volume (3M)911.98K
Price to Earnings (P/E)27.8
Beta (1Y)0.63
Revenue Growth-6.93%
EPS Growth-65.66%
CountryUS
Employees28,000
SectorConsumer Cyclical
Sector Strength46
IndustryPackaging & Containers
Share Statistics
EPS (TTM)1.65
Shares Outstanding98,624,790
10 Day Avg. Volume842,549
30 Day Avg. Volume911,977
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 CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$60.33Price Target Upside37.80% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
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 experiencing significant revenue and profit margin contractions, indicating potential challenges in market demand or pricing power. Increased debt levels and reduced equity suggest higher financial risk, while the company maintains a reasonable cash flow conversion rate. The financial health shows signs of stress with profitability and leverage being key areas of concern that require strategic attention.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
43.78
Price Trends
46.89
Negative
48.06
Negative
49.67
Negative
Market Momentum
0.10
Negative
56.18
Neutral
49.41
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 43.78 is below the 20-day moving average (MA) of 46.67, below the 50-day MA of 46.89, and below the 200-day MA of 49.67, indicating a bearish trend. The MACD of 0.10 indicates Negative momentum. The RSI at 56.18 is Neutral, neither overbought nor oversold. The STOCH value of 49.41 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 (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $17.01B | 21.18 | 19.03% | 2.64% | 7.45% | 5.26% | |
68 Neutral | $4.53B | 27.84 | 6.42% | 4.52% | -6.93% | -65.66% | |
67 Neutral | $3.95B | 14.67 | 45.91% | 2.95% | -1.75% | -21.15% | |
66 Neutral | $25.96B | 31.27 | 6.74% | 3.76% | -1.57% | 84.85% | |
59 Neutral | $12.18B | 11.09 | -1.08% | 3.77% | 1.26% | -19.82% | |
54 Neutral | $13.83B | 17.37 | 20.60% | 5.28% | -3.54% | 25.25% | |
43 Neutral | $14.26B | ― | 8.80% | 1.58% | -15.64% | -186.66% |
* Consumer Cyclical Sector Average
Performance Comparison
SON
Sonoco Products
43.78
-11.53
-20.85%
BALL
Ball
48.60
-17.15
-26.08%
IP
International Paper Co
47.98
11.18
30.38%
PKG
Packaging
183.42
-2.62
-1.41%
SEE
Sealed Air
24.41
-8.18
-25.10%
AMCR
Amcor
9.22
0.50
5.73%
Sonoco Products Earnings Call Summary
Earnings Call Date: Feb 18, 2025 | % Change Since: -8.04% | Next Earnings Date: Apr 29, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a positive outlook with significant achievements in acquisitions, productivity, and cash flow. However, challenges such as the Eviosus loss, natural disasters, and European market difficulties presented notable obstacles.Highlights
Acquisition and Integration of Eviosus
Sonoco Products Company acquired Eviosus, Europe's leading food cans and enclosure manufacturer, on December 4th, 2024, creating a global leader in sustainable metal packaging. The integration process is underway with a two-year $100 million synergy target.
Record Operating Cash Flow
Sonoco Products Company generated $834 million in operating cash flow and $456 million in free cash flow, marking the second-largest operating cash flow year for the company.
Productivity Savings and Investments
The company achieved approximately $183 million in productivity savings for 2024, and invested a record $378 million on capital projects focused on growth and productivity.
Strong Growth in Metal Packaging
Sonoco Products is adding capabilities to meet rising demand for aerosol cans in the US and wet pet food cans in both the US and Europe.
Positive Adjusted EBITDA Growth
Adjusted EBITDA increased by 5%, with margins improving to 14.9% in the fourth quarter.
2025 Growth Projections
The company projects sales to grow approximately 20% to between $7.75 billion and $8 billion in 2025, with adjusted EBITDA expected to grow approximately 30%.
Lowlights
Eviosus Loss and Synergy Delays
Eviosus recorded a loss in December 2024 due to interest expenses and a normal year-end holiday slowdown. The delay in achieving synergies was due to a late start on integration.
Impact of Hurricanes
Two hurricanes in the Southeast US affected operations, including the destruction of a roof at Sonoco's largest thermoforming facility in Florida.
Challenges in European Paper Segment
The industrial paper segment in Europe faced softness and competitive pricing challenges, necessitating capacity rationalization and restructuring.
Lower Volumes in Certain Segments
Volume declines were reported in some segments, including the impact of the exit from industrial operations in China and reduced volumes in the industrial plastic business.
Company Guidance
During the Sonoco Products Company Fourth Quarter 2024 Earnings Conference Call, the company provided robust guidance for 2025, projecting a sales growth of approximately 21.5% to reach around $8 billion. This growth is primarily attributed to the acquisition of Eviosus and organic growth in legacy businesses. The guidance anticipates an adjusted EPS growth of 19% to 23% above the 2024 EPS of $5.06, with the Eviosus acquisition expected to be 25% accretive. The company's operating cash flow is projected to remain strong, ranging from $800 to $900 million, with free cash flow between $450 to $550 million. Capital expenditures are forecasted at approximately $300 million, focusing on growth and margin expansion. The company aims for a leverage target of 3 to 3.3 times net debt to adjusted EBITDA by the end of 2026, supported by strong free cash flow and proceeds from strategic divestitures. The guidance reflects a strategic focus on fewer, bigger businesses that enhance value creation through earnings growth and margin improvement.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.
Executive/Board ChangesBusiness Operations and Strategy
Sonoco Products Announces Leadership Changes and Strategic Alignments
Neutral
Jan 6, 2025
Sonoco Products Company announced leadership changes with Jerry Cheatham appointed as interim Chief Financial Officer after the departure of Rob Dillard. Cheatham, a 36-year veteran at Sonoco, will maintain his role as Vice President of Global Finance for the Industrial Paper Packaging segment while the company searches for a permanent CFO. The company also highlighted other senior leadership roles and strategic alignments to simplify operations and enhance 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.