Sonoco (SON) Raises Q1 Earnings Outlook on Higher Demand
Zacks Equity Research
Sonoco Products Company SON 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%.
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