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Supplier of the Year? Understanding Sonoco Products’ Recognition by Mother Parkers

Gabriel Kane

Yesterday’s Consumer Pops and Drops: THS and KHC, SON and TM

(Continued from Prior Part)

Price movement of Sonoco Products

Sonoco Products Company (SON) has a market capitalization of $3.8 billion. On January 21, 2016, the stock fell by 1.5% to close the day at $37.13 per share. The stock’s price movements on weekly, monthly, and YTD (year-to-date) bases was -2.4%, -5.8%, and -9.2%, respectively.

As the graph shows, SON stock has technically broken support and was trading below all moving day averages as of January 21. As of that date, SON was trading 6.6% below its 20-day moving average, 9.6% below its 50-day moving average, and 10.9% below its 200-day moving average.

What this has meant for WOOD

The iShares Global Timber & Forestry ETF (WOOD) invests 4.0% of its holdings in Sonoco Products. The ETF tracks the 25 largest publicly listed companies that own or manage forests and timberlands. The YTD price movement of WOOD was -14.9% as of January 20, 2016.

The market cap of Sonoco Products’ competitors are as follows:

  • WestRock Company (WRK)–$9.4 billion
  • Bemis Company (BMS)—$4.2 billion
  • AptarGroup (ATR)—$4.1 billion

Sonoco’s recognition by Mother Parkers Tea & Coffee

Mother Parkers Tea & Coffee has recognized Flexibles division of Sonoco as the 2015 Supplier of the Year. These companies have had a relationship for more than 25 years and have focused on new products in the coffee and tea market with innovative packaging.

Performance of Sonoco Products in fiscal 3Q15

Sonoco Products (SON) reported fiscal 3Q15 net sales of approximately $1.2 billion, a fall of about 1.6% compared to $1.3 billion in fiscal 3Q14. Its net income and EPS (earnings per share) fell to $43.9 million and $0.43, respectively, in fiscal 3Q15, compared to $67.1 million and $0.65, respectively, in fiscal 3Q14.

Meanwhile, the SON’s cash and cash equivalents rose by 20.0%, and inventories fell by 5.6% in fiscal 3Q15 compared to fiscal 4Q14. Its long-term debt-to-equity ratio fell to 0.71 in fiscal 3Q15, compared to 0.79 in fiscal 4Q14.

The price-to-earnings and price-to-book value ratios of Sonoco Products were 16.1x and 2.6x, respectively, as of January 21, 2016.

Projections for SON

Sonoco Products has projected the EPS in the range of $0.59 to $0.64, $2.46 to $2.51, and $2.61 to $2.71 per share, for fiscal 4Q15, fiscal 2015, and fiscal 2016, respectively.

Now let’s analyze what’s been happening with Toyota Motors, another big loser on January 21, 2016.

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