Investors looking for shares of a company that has the remnants of a value stock and growth potential may want to consider Sonoco Products SON.
With its incorporation dating back to 1899, Sonoco has become a leading provider of consumer packaging, industrial products, protective packaging, and packaging supply chain services.
Headquartered in Hartsville South Carolina, now appears to be an ideal time to buy stock in this historic American company with SON sporting a Zacks Rank #1 (Strong Buy) and landing the Bull of the Day.
Q4 Expectations & FY25 Projections
Set to release its fourth-quarter results on February 18, Sonoco’s Q4 earnings are expected to increase 20% to $1.23 per share. This is despite Q4 sales forecast of $1.57 billion compared to $1.64 billion in the comparative quarter.
Speaking to Sonoco’s operational efficiency, the company is effectively navigating a weaker business environment and has started to stand out amongst its closest competitors such as Graphic Packaging Holding Company GPK and Sealed Air SEE.
Correlating with such, Sonoco’s EPS is now expected to dip 2% as the company rounds out fiscal 2024 but is projected to rebound and spike 19% in FY25 to $6.11 per share. Total sales are thought to have dipped 4% in FY24 but are expected to stabilize and soar 35% this year to $8.78 billion.
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Sonoco’s Attractive Valuation
Making FY25 rebound projections more appealing is that Sonoco’s stock trades at just 8X forward earnings compared to its Zacks Containers-Paper and Packaging Industry average of 15X.
Furthermore, SON trades nicely beneath its decade-long high of 19.9X forward earnings and is at a sharp discount to the median of 16.3X during this period.
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SON is also at the optimum level of less than 2X sales (0.7X) and its PEG ratio of 0.8 further suggests the company is undervalued when considering its growth rate.
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Sonoco’s Enticing Dividend
1. Sonoco currently has a very generous 4.26% annual dividend yield which impressively tops its industry average of 2.64%.
2. Another dividend hike should be expected in 2025 as Sonoco is not a member of the S&P 500 but would have the classification of a Dividend Aristocrat after increasing its dividend for more than 25 consecutive years (34).
3. Sonoco’s 42% payout ratio indicates there is plenty of room to raise its dividend in the future.
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Bottom Line
Sonoco is one of the more intriguing stocks to watch leading up to its Q4 report, and in addition to its strong buy rating has an overall “A” VGM Zacks Style Scores grade for the combination of Value, Growth, and Momentum.
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See them now >>Sonoco Products Company (SON) : Free Stock Analysis Report
Sealed Air Corporation (SEE) : Free Stock Analysis Report
Graphic Packaging Holding Company (GPK) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
