Head-To-Head Contrast: Sonoco Products (SON) and Avery Dennison Corporation (AVY)

Avery Dennison Corporation (NYSE: AVY) and Sonoco Products (NYSE:SON) are both mid-cap industrial products companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, earnings, risk, dividends, profitability and analyst recommendations.

Valuation & Earnings

This table compares Avery Dennison Corporation and Sonoco Products’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Avery Dennison Corporation $6.26 billion 1.31 $792.50 million $4.26 21.84
Sonoco Products $4.76 billion 1.00 $589.72 million $2.64 18.19

Avery Dennison Corporation has higher revenue and earnings than Sonoco Products. Sonoco Products is trading at a lower price-to-earnings ratio than Avery Dennison Corporation, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Avery Dennison Corporation has a beta of 1.18, meaning that its share price is 18% more volatile than the S&P 500. Comparatively, Sonoco Products has a beta of 1.12, meaning that its share price is 12% more volatile than the S&P 500.

Profitability

This table compares Avery Dennison Corporation and Sonoco Products’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Avery Dennison Corporation 6.14% 39.29% 8.44%
Sonoco Products 5.61% 16.64% 6.51%

Analyst Recommendations

This is a summary of current ratings for Avery Dennison Corporation and Sonoco Products, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Avery Dennison Corporation 0 2 4 0 2.67
Sonoco Products 2 5 1 0 1.88

Avery Dennison Corporation currently has a consensus target price of $90.60, suggesting a potential downside of 2.60%. Sonoco Products has a consensus target price of $51.83, suggesting a potential upside of 7.94%. Given Sonoco Products’ higher possible upside, analysts clearly believe Sonoco Products is more favorable than Avery Dennison Corporation.

Insider & Institutional Ownership

87.6% of Avery Dennison Corporation shares are owned by institutional investors. Comparatively, 73.9% of Sonoco Products shares are owned by institutional investors. 1.4% of Avery Dennison Corporation shares are owned by company insiders. Comparatively, 1.9% of Sonoco Products shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Avery Dennison Corporation pays an annual dividend of $1.80 per share and has a dividend yield of 1.9%. Sonoco Products pays an annual dividend of $1.56 per share and has a dividend yield of 3.2%. Avery Dennison Corporation pays out 42.3% of its earnings in the form of a dividend. Sonoco Products pays out 59.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Avery Dennison Corporation has increased its dividend for 6 consecutive years and Sonoco Products has increased its dividend for 36 consecutive years. Sonoco Products is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Avery Dennison Corporation beats Sonoco Products on 13 of the 17 factors compared between the two stocks.

Avery Dennison Corporation Company Profile

Avery Dennison Corporation (Avery Dennison) is engaged in the production of pressure-sensitive materials and a range of tickets, tags, labels and other converted products. The Company’s segments include Label and Graphic Materials (LGM); Retail Branding and Information Solutions (RBIS), and Industrial and Healthcare Materials (IHM). The Company’s LGM segment manufactures and sells Fasson-, JAC-, and Avery Dennison-brand pressure-sensitive label and packaging materials, Avery Dennison- and Mactac-brand graphics, and Avery Dennison-brand reflective products. The Company’s RBIS segment designs, manufactures and sells a range of branding and information solutions to retailers, brand owners, apparel manufacturers, distributors and industrial customers on a global basis. The Company’s IHM segment manufactures and sells Fasson-brand and Avery Dennison-brand tapes and fasteners, Vancive-brand medical pressure-sensitive adhesive (PSA) based materials and products, and performance polymers.

Sonoco Products Company Profile

Sonoco Products Company is engaged in manufacturing of industrial and consumer packaging products, and providing packaging services. The Company operates in four segments: Consumer Packaging, Paper and Industrial Converted Products, Display and Packaging, and Protective Solutions. Its Consumer Packaging segment’s products and services include round composite cans, aluminum, steel and peelable membrane easy-open closures for composite and metal cans; plastic bottles, cups and trays, and printed flexible packaging and global brand management. The Display and Packaging segment’s products and services include point-of-purchase displays; fulfilment; supply chain management, and paperboard specialties. Its Paper and Industrial Converted Products segment provides the raw material for its fiber-based packaging. The Protective Solutions segment’s products and services include custom-engineered and expanded foam protective packaging and components, and temperature-assured packaging.

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