Sonoco Products Company (SON - Free Report) has announced that it will hike the prices for all rigid plastic packaging by 6-10% to counter the impact of the persistent rise in raw material costs. The price increase will be effective on shipments in the United States and Canada, beginning Nov 5.
The principal raw materials used by Sonoco are recovered paper, paperboard, steel, aluminum and plastic resins which are purchased from several outside sources. Notably, the company had to implement price hikes due to the escalating operating costs, including freight and other paper-making consumables.
Sonoco is focusing on the domestic and global sourcing to offset inflation. The company also uses derivatives to mitigate some of the effects of raw material and energy-cost fluctuations.
Moreover, Sonoco is constantly seeking cost-effective methods and structure to serve its customers. It will continue to monitor market conditions, in order to determine if additional pricing actions will be required.
Sonoco’s shares have outperformed the industry with respect to price over the past year, mainly due to its focus on Grow and Optimize strategy and acquisitions. Shares of the company have gained around 7% as against the 5% loss recorded by the industry during the same time frame.
Zacks Rank & Stocks to Consider
Sonoco currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the same industry include Atkore International Group Inc. , Donaldson Company, Inc. (DCI - Free Report) and Tetra Tech, Inc. (TTEK - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Atkore has a long-term earnings growth rate of 10%. The stock has gained around 29% in a year’s time.
Donaldson has a long-term earnings growth rate of 11.5%. The company’s shares have rallied around 24% over the past year.
Tetra Tech has a long-term earnings growth rate of 14%. Its shares have rallied 40% in the past year.
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