Sonoco Earnings: End-Market Demand Improves While Portfolio Overhaul Marches On

No-moat-rated Sonoco reported third-quarter results that were largely in line with our expectations. Net sales declined 2% year over year, mainly due to price headwinds that were somewhat offset by volume gains. We are encouraged by the organic volume growth in the consumer packaging segment, but headwinds in Sonoco’s industrial paper packaging business persisted. Sonoco continues to execute on its portfolio overhaul, announcing multiple acquisitions, divestitures, and strategic reviews this year. While we think the company will benefit from a more concentrated portfolio, the full effect of these moves won’t be known for some time. As such, we’ve maintained our $53 fair value estimate.