2024-05-31 23:51:03 ET
Summary
- Sonoco Products' shares have underperformed the market due to excess inventory and weak pricing over the past year.
- The company's Q1 earnings report showed a decline in revenue and margins, raising concerns about its ability to deliver on my expectations.
- Sonoco's volume growth and pricing gains have been lower than anticipated, leading to lower free cash flow and leaving shares more expensive than previously forecast.
Shares of Sonoco Products ( SON ) have been a poor performer over the past year, losing 2% of their value even as the broader market has rallied given excess inventory and weak pricing. However, shares have performed better of late, aided by a solid Q1 earnings report. I last covered SON in December , rating shares a “buy,” and since then, they have rallied and been a market performer, returning 12.7% vs the market’s 12.3% gains. Shares do remain substantially below my $72 target, and with new financials, now is an opportune time to determine if SON can rally further and outperform the market. Given the negative surprises in the business, investors should be glad about market-like returns and reduce positions....
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Sonoco Products: Disappointing Prices Weigh On Free Cash Flow (Rating Downgrade)