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Sonoco (SON) Raises Q1 Earnings Outlook on Higher Demand

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Sonoco Products Company (SON - Free Report) announced adjusted earnings per share expectation of $1.30-$1.40 for the first quarter of 2023. The new range has moved up from the company’s previously disclosed range of $1.15-$1.25.

The increase in guidance was driven by improving productivity and higher demand than estimated in certain products and end markets. Lower-than-expected input costs also aided the upside.

In the fourth quarter of 2022 , the company reported that it expected an adjusted EPS of $5.70-$5.90 for 2023. Operating cash flow for the year is expected between $925 million and $975 million, and free cash flow is projected between $550 million and $650 million.

The company delivered adjusted earnings per share of $1.27 in the fourth quarter of 2022, beating the Zacks Consensus Estimate of $1.26. The figure came within the company’s guidance of $1.20-$1.30. The bottom line improved 28% from the prior-year quarter. Net sales were $1,676 million, up 16.5% year over year. However, the top line missed the Zacks Consensus Estimate of $1,799 million.

Sonoco has been gaining from its Metal Packaging acquisition, and strong recovery in price across most of its businesses. Stable consumer demand, recent acquisitions and productivity initiatives are expected to drive the company's results in the current year. However, raw material, energy and freight cost pressures, and supply-chain challenges will likely hurt the company’s results in the near term.

The Zacks Consensus Estimate for SON’s first-quarter 2023 earnings is pegged at $1.18 per share, indicating a fall of 36.2% from the prior-year quarter’s reported figure. The same for revenues is pegged at $1.8 billion, indicating year-over-year growth of 1.6%.

Sonoco has a four-quarter trailing surprise of 6.1%, on average.

Price Performance

Sonoco’s shares have lost 8.1% in the past year compared with the industry’s fall of 7%.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

Zacks Rank and Stocks to Consider

Sonoco currently carries a Zack Rak #3 (Hold).

Some better-ranked stocks from the Industrial Products sector are OI Glass (OI - Free Report) , Alamo Group (ALG - Free Report) , and Illinois Tool Works (ITW - Free Report) . OI and ALG flaunt a Zacks Rank #1 (Strong Buy) at present, and ITW has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

OI Glass has an average trailing four-quarter earnings surprise of 16.4%. The Zacks Consensus Estimate for OI’s 2023 earnings is pegged at $2.57 per share. This indicates an 11.7% increase from the prior-year reported figure. The consensus estimate for 2023 earnings has moved 16% north in the past 60 days. OI’s shares gained 70.2% in the last year.

Alamo has an average trailing four-quarter earnings surprise of 6%. The Zacks Consensus Estimate for ALG’s 2023 earnings is pegged at $9.79 per share. This indicates a 13.6% increase from the prior-year reported figure. The consensus estimate for 2023 earnings has moved north by 7.5% in the past 60 days. Its shares gained 20.6% in the last year.

The Zacks Consensus Estimate for Illinois Tool Works’ fiscal 2023 earnings per share is pegged at $9.61, suggesting an increase of 4.8% from that reported in the last year. The consensus estimate for fiscal 2023 earnings moved 4% upward in the last 60 days. ITW has a trailing four-quarter average earnings surprise of 0.9%. Its shares gained 9% in the last year.

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