Manufacturer of consumer and industrial packaging products, Sonoco Products Co. (NYSE:SON) is scheduled to report second-quarter 2017 results on Jul 20, before the opening bell. In the last reported quarter, Sonoco’s both top-line and bottom-line have dipped on a year-over-year basis. While earnings beat the Zacks Consensus Estimate, revenues came in line. Let’s see how things are shaping up prior to this announcement.
Earnings Whispers
Our proven model does not conclusively show that Sonoco is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP as well as a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. However, this is not the case here as elaborated below.
Zacks ESP: Sonoco has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 71 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Sonoco carries a Zacks Rank #3, which increases the predictive power of ESP. However, a 0.00% Earnings ESP makes the surprise prediction difficult.
Importantly, the Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
Surprise History
Sonoco Products Company Price and EPS Surprise
Sonoco Products Company Price and EPS Surprise | Sonoco Products Company Quote
In the last reported quarter, the company posted a negative earnings surprise of 3.51%. Sonoco has outpaced the Zacks Consensus Estimate in three of the trailing four quarters, with an average positive earnings surprise of 3.79%.
Factors at Play
For second-quarter 2017, the company anticipates earnings per share in the range of 69–73 cents. Compared with the year-ago quarter’s earnings of 71 cents per share, the mid-point of the guidance reflects a decline of 3%. This guidance takes into consideration the negative impact of divestitures in 2016, partially offset by the acquisition of Peninsula Packaging and other buyouts completed in 2016.
Old Corrugated Cardboard (OCC) and resin prices are on the rise. The company has implemented price increases. These increases, as well as contractual price adjustments, should offset the increased cost for OCC. A stronger dollar, weak results from single corrugated medium machine, and slowdown in manufacturing remain concerns.
Price Performance
Sonoco has underperformed Zacks categorized Containers-Paper/Plastic industry in the past three months. The company’s shares gained around 1.2% compared with 9.9% growth recorded by the industry.
Stocks to Consider
Here are some stocks which you may consider as our model shows that they have the right combination of elements to post an earnings beat in their upcoming releases:
Avery Dennison Corporation (NYSE:AVY) has an Earnings ESP of +1.68% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Caterpillar Inc. (NYSE:CAT) has an Earnings ESP of +11.67% and a Zacks Rank #2.
Owens-Illinois, Inc. (NYSE:OI) has an Earnings ESP of +3.03% and a Zacks Rank #2.
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Sonoco Products Company (SON): Free Stock Analysis Report
Owens-Illinois, Inc. (OI): Free Stock Analysis Report
Caterpillar, Inc. (CAT): Free Stock Analysis Report
Avery Dennison Corporation (AVY): Free Stock Analysis Report
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