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Sonoco (SON) Expands Paper Cups Recycling in the United States

Zacks Equity Research
·4 min read

Sonoco Products Company SON aims to accelerate recycling opportunities for paper cups in bales of residential mixed paper, which will be used as raw material for the company’s Hartsville, S.C., paperboard mill to produce new paperboard.

Sonoco’s every paper mill in the United States accepts rigid paper cans in bales of mixed paper from residential Material Recovery Facilities (MRFs). Additional testing is ongoing to expand cup recycling across all Sonoco mills utilizing residential mixed paper.

As a leading provider of recycler packaging, paper mill operator and packaging converter, Sonoco will help deliver end-of-life solutions across its consumers and industrial packaging platforms. The company is progressing in recycling paper containers with metal ends not only through the steel stream but also through the paper stream.

Sonoco’s mills recycle EnviroCan paper containers in residential mixed paper and can also recycle other similar polycoated fiber-based containers through the post-consumer mixed paper stream. The company is well-positioned to benefit from recycling and processing fiber-based packaging through conventional paper mill pulping systems across its manufacturing network in the U.S.

Paper cups can improve new products with recycled fiber and are highly required for paper mills. Through its paper cups, Sonoco continues to support the paper industry in building the infrastructure and making recycled paper the best choice for the environment. SON’s sustainability and recycling efforts continue to support the growing global demand for environment-friendly biodegradable packaging materials.

Sonoco continues to expand the recovery and recycling of scrap materials from its EnviroCan paper containers production in the United States, which are utilized as raw materials for the production of 100% recycled new paperboard at its uncoated recycled paperboard mills.

Last month, Sonoco raised its second-quarter 2022 earnings guidance on the back of strong quarter-to-date results and the current prediction for the second quarter. It now expects adjusted earnings per share (EPS) between $1.60 and $1.70 for the June-end quarter, indicating year-over-year growth of 70% at the mid-point. The updated guidance is also higher than the earlier guidance of $1.20-$1.30 per share.

Robust customer demand in the company’s Consumer Packaging and All Other segments, strong recovery in price and cost across most of its businesses are likely to deliver better-than-expected operating results in the second quarter.

Sonoco’s consumer packaging business is expected to gain from the Metal Packaging acquisition. The segment’s flexible packaging business is gaining from strong demand for confectionery, food service and other food products. Plastic food packaging reflects higher demand in the fresh and prepared food markets. SON’s industrial-served markets will gain from strong demand for global tubes, cores and cones. Its focus on optimizing businesses through productivity improvement, standardization and cost control will also boost results.

Price Performance

Shares of Sonoco have lost 1.5% in the past six months compared with the industry's decline of 5%.

Zacks Investment Research
Zacks Investment Research


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Zacks Rank & Stocks to Consider

Sonoco currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector are Greif Inc. GEF, Titan International TWI and RBC Bearings ROLL. While GEF and TWI each flaunt a Zacks Rank #1 (Strong Buy), ROLL carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Greif has an estimated earnings growth rate of 36% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 17%.

Greif pulled off a trailing four-quarter earnings surprise of 22.9%, on average. The company’s shares have gained 3% in three months' time.

Titan International has an estimated earnings growth rate of 112% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 55%.

Titan International pulled off a trailing four-quarter earnings surprise of 56.4%, on average. The company’s shares have appreciated 5.5% in the last three months.

RBC Bearings has an expected earnings growth rate of 50% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 7% in the past 60 days.

RBC Bearings has a trailing four-quarter earnings surprise of 3.4%, on average. ROLL’s shares have increased 3% over the past three months.


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