Sonoco (SON) Hits 52-Week High On Improved Q2 Earnings

Shares of Sonoco Products Co. (NYSE:SON) reached a fresh 52-week high of $52.27 on Aug 26, before closing lower at $51.47. This new high was boosted by strong second-quarter 2016 results and an elevated 2016 guidance.

The manufacturer of consumer and industrial packaging products has a market capitalization of roughly $5.2 billion. Average volume of shares traded over the last three months is around 435.6K. The stock flaunts a one-year return of about 31% and a year-to-date return of around 26%. Moreover, Sonoco has beaten the Zacks Consensus Estimate in three of the trailing four quarters, with an average positive surprise of 3.57%.

SONOCO PRODUCTS Price and Consensus

SONOCO PRODUCTS Price and Consensus | SONOCO PRODUCTS Quote

Driving Factors

Sonoco’s second-quarter 2016 adjusted earnings increased 7% year over year and exceeded management’s guided range on the back of growth in the Consumer Packaging, Protective Solutions, and Display and Packaging segments. Further, gains from a positive price/cost relationship, a favorable volume/mix ratio and productivity improvement backed the increase.

For the third quarter, Sonoco expects earnings per share in the range of 65–70 cents. Compared with the year-ago quarter’s bottom line of 65 cents, this reflects a range of flat earnings to 8% growth.

Sonoco raised its earnings per share guidance to the range of $2.68–$2.74 for 2016. The midpoint depicts an 8% year-over-year improvement in base earnings. The company remains focused on further improving its cost competitiveness by optimizing its supply chain activities, enhancing productivity, and streamlining corporate and business unit structures.

Sonoco remains committed to executing its ‘Grow and Optimize’ strategy, which is focused on targeted growth of its Consumer Packaging and Protective Solutions businesses and about optimizing its Industrial-focused businesses. The company will also launch several new innovative products in 2016.

Sonoco has capital growth projects in the pipeline through 2017 that will help expand its global production capability in composite cans, flexible packaging and rigid plastic containers. Though the company will face significant headwinds like a stronger dollar, acquisitions and investment in capacity will drive its results.

Sonoco currently has a Zacks Rank #3 (Hold).

Stocks to Consider

Better-ranked stocks in the sector include Berry Plastics Group, Inc. (NYSE:BERY) , Packaging Corporation of America (NYSE:PKG) and ACCO Brands Corporation (NYSE:ACCO) . While Berry Plastics sports a Zacks Rank #1 (Strong Buy), Packaging Corporation of America and ACCO Brands carry a Zacks Rank #2 (Buy).