Sonoco Earnings: Pricing Remains a Headwind, but Volume Growth Hints at End-Market Recovery

No-moat-rated Sonoco reported underwhelming second-quarter results as the company continued to face pricing headwinds. Net sales fell 5% year over year as growth in the industrial paper segment was not enough to offset declines in consumer packaging. Additionally, consolidated operating margins contracted 240 basis points to 8.6%. Sonoco also made progress in its portfolio realignment, divesting its protective solutions business earlier this year and exiting some thermoforming markets as the company works to remove noncore businesses. While near-term headwinds remain, we are encouraged by the recovery in industrials and metal packaging in the quarter. As such, we’ve maintained our $53 fair value estimate.