Sonoco Products CompanySON

Stock Research and Analysis

by Daniel Rohr, CFA

Sonoco Products makes a wide variety of packaging products, from candy wrappers to caulk tubes, and continues to deliver solid profits as it increases revenue. Sonoco may find it much more difficult to post revenue and profit growth in the coming years Read more

Bulls Say

Sonoco's strong balance sheet compares favorably with peers and affords the company superior protection against cyclical downturns.

New product introductions have allowed Sonoco to maintain its margins as the profitability of more mature product lines declines.

Sonoco's geographic reach is expanding. Sales to customers outside the U.S. account for a growing portion of total revenue, providing important diversification benefits. Read more

Bears Say

Packaging is mostly a commodity industry. Producers like Sonoco are subject to cyclical demand and fluctuating raw-material costs that can squeeze margins.

Sonoco occupies a relatively weak bargaining position with some of its larger customers, such as consumer-goods titans P&G and Kraft.

Management compensation is tied to earnings per share, which may encourage acquisitions that boost earnings but don't necessarily create value. Read more

Strategy

Revenue growth appears to be management's primary objective, a goal the company aims to meet through new product offerings, geographic expansion, and strategic acquisitions. We expect acquisitions will Read more

Management

Harris DeLoach, president and CEO since 2000, assumed the role of board chairman in 2005. DeLoach had previously served in a variety of vice president roles since 1986. Stewardship at Sonoco is a mixed bag. On the positive side, Sonoco is one of the Read more

Profile

Sonoco Products manufactures a wide variety of paper and plastic packaging. Its largest product offerings are paperboard tubes, shaped cans, and beverage and chemical bottles. Read more

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