Sonoco (SON) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
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Sonoco (SON) saw its shares surge in the last session with trading volume being higher than average. The latest trend in earnings estimate revisions may not translate into further price increase in the near term.
Sonoco Products offers a nearly 5% yield, a 42-year dividend growth streak, and trades at a deep discount to historical valuation. Recent transformation and the Eviosys acquisition position SON for significant revenue and earnings growth, with consensus 2025 EPS estimates much higher than 2024. Valuation models suggest a potential 20%+ compound annual return, driven by earnings growth, multiple expansion, and a well-covered dividend.
Sonoco's transformation to focus on larger, core businesses is nearly complete, highlighted by the Eviosys acquisition and asset divestitures. Despite a 42-year dividend increase streak and a 4.9% yield, concerns linger over FY25 operating cash flow and debt from recent deals. Insider buying and analyst buy ratings do suggest some confidence in the longer-term prospects of Sonoco Products.
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Sonoco's shares look cheap based on earnings multiples, but high leverage and recent M&A activity keep me cautious despite a strong dividend record. The Eviosys acquisition and TFP divestment have reshaped the business, but pro forma net debt remains elevated at about $5.4 billion. Despite a 4.6% dividend yield and 7-8x earnings multiple, I want to see a focus on deleveraging and cash flow over further M&A or dividend hikes.
Sonoco, which makes packaging products for global consumer and industrial companies has underperformed other material stocks and mid-caps this year. However, operational improvements, portfolio rationalization, and the Eviosys acquisition are likely to margin expansion and robust earnings growth, going forward. Sonoco trades at a steep discount on a forward P/E basis, and while the current FCF yield may not be eye-popping and below average, this is only because of seasonaleffects.
Sonoco (SON) came out with quarterly earnings of $1.38 per share, missing the Zacks Consensus Estimate of $1.39 per share. This compares to earnings of $1.12 per share a year ago.
Sonoco (SON) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
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SON completes the sale of its Thermoformed and Flexibles Packaging business as part of its ongoing efforts to optimize its portfolio.