Sonoco Products Co (SON) stock analysis

P/E against its history

Not enough price and earnings history to compare.

P/E against the industry

Needs positive earnings and enough profitable companies in the industry.

EV/EBITDA above its 5-year median

Sonoco Products's EV/EBITDA of 12.4 is above its 5-year median of 9.9.

P/B above the industry

Sonoco Products's price-to-book of 1.75 is above the Paper and Allied Products median of 1.46.

Trading above fair value

The share price of $49.60 is above our fair value estimate of $42.24.

Margin of safety under 20%

The price is 17.4% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 8.7% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 28.7% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew -136% over the last twelve months, against a 5-year average of 37.0% a year.

Growing faster than the industry

Revenue grew 3.6% over the last twelve months; the Paper and Allied Products median is 0.8%.

Guidance issued

The latest outlook (Revised Full-Year 2026 Net Sales, Oct 21, 2026) was issued for the first time, so it neither adds nor takes away points.

Gross margin slipping

Gross margin was 20.2% over the last twelve months, against 21.2% a year earlier.

Return on equity under 15%

Return on equity was -7.4% over the last twelve months and averaged 16.3% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was 2.1%, below the 10% that usually covers the cost of capital.

Return on equity below the industry

Sonoco Products's return on equity of -7.4% is below the Paper and Allied Products median of 0.3%.

Earnings grew over 5 years

Net income grew 37.0% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was -3.1% over the last twelve months, against a 5-year average of 6.3%.

Net margin below the industry

Sonoco Products's net margin of -3.1% is below the Paper and Allied Products median of 0.2%.

High debt

Debt is 153% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 89.5% five years ago to 153%.

Debt not well covered by cash flow

Operating cash flow over the last twelve months equals 14.7% of total debt; we look for at least 20%.

Interest not well covered

Operating income covers interest expense 1.1 times; we look for at least 5.

Short-term assets cover short-term debts

Current assets are 1.18 times current liabilities.

Elevated bankruptcy risk

The Altman Z-score is 1.61; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Sonoco Products paid dividends worth 3.2% of the share price over the last twelve months.

Yield below Treasuries

The 3.2% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Sonoco Products yields 3.2%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Earnings cover

Needs dividends paid and net income.

Covered by free cash flow

Dividends take 60.2% of free cash flow.