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Sonoco (SON) Hikes Prices for Corrugating Medium Grades

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Sonoco Products Company (SON - Free Report) is implementing price hikes of $50/ton for all domestic and export shipping of corrugating medium grades from its Hartsville, S.C. paper mill. The price rise will be effective relating to the shipments on and after Nov 2, 2020.

Sonoco is executing price-increase actions in response to the evolving market demand and extended order backlogs. The company’s focus on optimizing businesses through productivity improvement, standardization and cost control will also aid its performance in the near term. In addition, stable Old Corrugated Containers (OCC) price is likely to offset the negative impacts of price/cost, and improving operating margins. Notably, OCC is the largest raw material used by the company's recycled paperboard mills.

Sonoco expects its Consumer Packaging segment to gain from the demand from stay-at-home customers owing to the pandemic. Approximately 80% of the segment’s sales flow in from food packaging, where the company is witnessing increased orders. Further, paperboard operations in North America are likely to be relatively steadier as elevated demand for the tissue and the towel market will help offset declines from some industrial converted-product businesses.

The company is focused on driving growth, margin expansion and generating solid free cash flow. It is also focused on acquisitions in the targeted growth areas of flexible packaging and thermal formed rigid plastic containers, along with the development of new products.

However, Sonoco’s industrial-related markets will witness bleak demand compared with the previous year due to the pandemic-induced shutdowns. The Paper and Industrial Converted Products segment will be affected by a negative price/cost relationship due to higher year-over-year recycled fiber costs and lower market pricing.

Price Performance

Shares of Sonoco have lost 6.2% over the past year, as against the industry's growth of 11.2%.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the Industrial Products sector include Graphic Packaging Holding Company (GPK - Free Report) , Titan International, Inc. (TWI - Free Report) and Fortune Brands Home & Security, Inc. (FBHS - Free Report) , each carrying a Zacks Rank of 2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Graphic Packaging has a projected earnings growth rate of 21.8% for the current year. Shares of the company have gained 2.1% over the past year.

Titan International has an estimated earnings growth rate of 21.1% for 2020. The company’s shares have gained 10.3% in a year’s time.

Fortune Brands has an expected earnings growth rate of 6.9% for the current year. The stock has surged 55.6% in the past year.

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