Sonoco (SON) Expands Paper Container Recycling in the U.S.
Sonoco Products Company SON announced that it is expanding the recovery and recycling of scrap materials from the company’s EnviroCan paper containers production in the United States. These recycled scrap materials will be utilized as raw materials for production of new paperboard at the company’s three uncoated recycled paperboard mills.
Sonoco expects to divert approximately 3,300 tons scrap materials annually from four of its paper container operations based in the United States. These materials will be delivered to Sonoco’s paper mills in Menasha, Newport and City of Industry and will be used as raw material for production of 100% recycled paperboard.
Being a leading provider of recycler packaging, paper mill operator and packaging converter, Sonoco will help deliver end-of-life solutions across its consumers and industrial packaging platforms. In fact, the company is making progress in recycling paper containers with metal ends not only through the steel stream, but also through the paper stream. Also, Sonoco is focused on expanding recycling of paper cans through post-consumer recycling streams.
Sonoco is currently working with the Alliance for Beverage Cartons and the Environment (ACE UK) to recycle its paper containers at the company’s U.K-based Stainland paper mill in order to produce 100% recycled coreboard.
The company is gaining from robust demand for the consumer packaging business, driven by strong food packaging demand on consumers’ at-home consumption habits in response to the pandemic. Moreover, demand for the Industrial Packaging segment benefits from the recovery of the global industrial market from the pandemic-induced slump in 2020. Elevated demand for the tissue and towel markets are driving paperboard operations in North America, while global demand for uncoated recycled paperboard remains strong. Also, the company’s Protective Solutions business is likely to witness higher demand in the pharmaceutical and appliance-served markets in the near term.
Sonoco projects second-quarter 2021 adjusted earnings per share between 82 cents and 88 cents compared with the earnings of 79 cents recorded in the prior-year quarter. For the current year, management has raised its adjusted earnings per share guidance to $3.50-$3.60 from the prior guidance of $3.40 to $3.60. The upbeat guidance assumes that global business activity will continue to improve on the government stimulus measures and reopening of businesses.
Price Performance
Shares of Sonoco have gained 29.6% over the past year compared with the industry's rally of 38.9%.
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Zacks Rank & Stocks to Consider
Sonoco currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the industrial products sector are Tennant Company TNC, Encore Wire Corp. WIRE and Arconic Corp. ARNC. All of these stocks sport a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Tennant has an anticipated earnings growth rate of 49.5% for 2021. The company’s shares have gained around 18%, year to date.
Encore Wire has an estimated earnings growth rate of 49.5% for the ongoing year. Year to date, the company’s shares have rallied nearly 36%.
Arconic has a projected earnings growth rate of 447% for the current year. The stock has appreciated around 21%, so far this year.
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