Sonoco Hikes URB Product Prices To Counter Escalating Costs

Sonoco Products Company (NYSE:SON) has announced a $50 per ton price hike on all grades of uncoated recycled paperboard (URB) to counter inflating input costs. The raised price will be effective on shipments in the United States and Canada beginning Feb 19.

The price rise has been necessitated chiefly by the escalating operating costs, including freight, energy and other paper-making consumables. This move will assist Sonoco to continue providing high-quality, value-adding products to customers.

An increase in costs can adversely affect Sonoco’s business and financial results. The ability to pass them on to customers, by raising prices, will aid margin performance. Thus, the company normally hikes prices to counter rising raw material costs. The company also uses derivatives to mitigate some of the impact of raw material and energy-cost fluctuations.

Sonoco Products Company Price

Sonoco Products Company Price | Sonoco Products Company Quote

Notably, Sonoco is constantly seeking the most cost-effective methods and structure to serve its customers. It will continue to monitor market conditions, in order to determine if additional pricing actions will be required.

URBs are the key products of Sonoco’s Paper and Industrial Converted Products segment. The segment accounted for approximately 36% of its consolidated net sales in the third quarter of 2017.

For the fourth quarter, the company projects earnings per share in the range of 68-74 cents. This guidance takes into consideration the impact of acquisitions and expected changes in raw material costs during the quarter.

Share Price Performance

In the last year, Sonoco has underperformed the industry it belongs to, affected by sluggish demand trends in the consumer business. The stock has inched up 1.1%, while the industry has ascended 14.8%.

Zacks Rank & Stocks to Consider

Currently, Sonoco carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the sector are Deere & Company (NYSE:DE) , H&E Equipment Services, Inc. (NASDAQ:HEES) and Graphic Packaging Holding Company (NYSE:GPK) . While Deere and H&E Equipment sport a Zacks Rank #1 (Strong Buy), Graphic Packaging carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Deere has a long-term earnings growth rate of 8.2%. Its shares have rallied 32.6%, over the past six months.

H&E Equipment Services has a long-term earnings growth rate of 18.6%. The company’s shares have appreciated 82.8% during the same time frame.

Graphic Packaging has a long-term earnings growth rate of 5%. The stock has gained 18.5% in six months’ time.

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