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Sonoco Products Company SON announced that it will increase the price of its paper-based tubes and cores by at least 6% due to the persistent rise in raw material costs. The price hike will be effective from Jul 16, relating to the shipments in the United States and Canada.
Notably, Paperboard tubes and cores are elements of Sonoco’s Paper and Industrial Converted Products segment. In 2017, the company’s tubes and cores products were the largest revenue-producing group of products, representing around 22% of consolidated net sales in the year ended Dec 31, 2017.
The price rise of tubes and cores is in response to the recent increase in costs for uncoated recycled paperboard (URB) which represents the largest input cost for tubes and cores. Also, Sonoco hiked prices to combat the rising costs of transportation.
Sonoco Products Company Price
Sonoco Products Company Price | Sonoco Products Company Quote
Sonoco expects strong performance in its Paper and Industrial converted product segment in second-quarter 2018, largely driven by solid demand and benefit from a favorable price-cost relationship. However, expected cost increases in raw materials, particularly tinplate steel and old corrugate containers (OCC), might hurt earnings.
Although Sonoco projects that overall price/cost will be positive in 2018, the possibility of continued volatility in key raw material prices could make pricing for their recovery more challenging. Further, the company anticipates to face elevated freight costs and increased labor costs in 2018 which also remain matters of concern.
Share Price Performance
Sonoco’s shares have outperformed the industry with respect to price, over the past year. The company’s shares have gained around 3%, while the industry recorded growth of 2%.
Zacks Rank & Other Stocks to Consider
Sonoco currently carries a Zacks Rank #2 (Buy).
Other top-ranked stocks in the same space include Cintas Corporation CTAS, Tetra Tech, Inc. TTEK and ACCO Brands Corporation ACCO. All three stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Cintas has a long-term earnings growth rate of 12%. Its shares have appreciated 47%, over the past year.
Tetra Tech has a long-term earnings growth rate of 13.3%. The company’s shares have been up 24% in the past year.
ACCO Brands has a long-term earnings growth rate of 10%. The stock has gained 16% in a year’s time.
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