$17.68
$83.23
bear $17.68
base $52.62
bull $83.23
margin of safety $30.00
market price* $49.79
Sonoco Products is a South Carolina packaging maker that, after three years of reshaping, is now essentially two businesses. Consumer Packaging (about two-thirds of 2025 sales) makes metal food cans, ends, closures and aerosol cans, plus rigid paper containers such as composite snack and powder canisters. Its European metal can arm is the former Eviosys, bought in December 2024 for about $3.8 billion and now run as Sonoco Metal Packaging EMEA. Industrial Paper Packaging makes paper tubes, cores and cones and runs recycled paperboard mills. Sonoco sold its thermoformed and flexible packaging business (TFP) to Toppan on April 1, 2025 for $1.81 billion and its ThermoSafe temperature-control business to Arsenal on November 3, 2025 for $656 million, and used the proceeds to pay down debt. 2025 sales were $7.5 billion: about 48% in the United States, 43% in Europe, the Middle East and Africa, and the rest in Asia-Pacific, Canada and other regions. How we measure earnings. We start from cash from operations, strip out working-capital swings, and subtract stock pay and the capital spending needed to keep the plants running. On that basis the old Sonoco produced between $1.85 and $4.26 a share a year from 2016 to 2024. Several weak years (2017, 2019 and 2021) were held down by large one-off pension contributions; the 2021 one came from winding up the US pension plan. Because this valuation looks at the business before its lenders are paid, we add back cash interest. On that basis the old company produced a median of about $3.90 a share. Two accounting judgements matter. First, in 2025 we added back the $248.8 million of tax charged on the TFP and ThermoSafe sale gains. The sale proceeds themselves are not counted as earnings, so the tax on them should not be either. That tax (about $103 million paid in the first half of 2026) is instead treated as money the company owes. Second, the jumps in sales in 2022 (Ball Metalpack) and 2025 (Eviosys) came from acquisitions, so we treated all capital spending in those years as upkeep rather than growth spending. Starting level. The current company has existed in its present form for only about one year, so we cannot simply take a long-run median. We used three checks. (1) Full-year 2025 cash flow before interest, about $6.90 a share, less the first-quarter TFP and ten months of ThermoSafe that are now gone, gives about $6.15. (2) Building up from 2025 operating results excluding ThermoSafe, less upkeep capital spending, restructuring cash and tax, gives about $6.70. (3) The old company's normal level, plus Eviosys's earnings and minus what TFP and ThermoSafe earned, gives about $5.30-6.05. We start from $6.10 a share before interest. Amortization of acquired customer relationships, mostly from Eviosys, now runs about $182 million a year. We add it back because the plants and customer contracts are kept up by ongoing capital spending. Any real erosion of those customer relationships is carried in the cases as falling volumes, not by lowering the starting level. Growth. On a per-share basis, cash flow in 2025 jumped roughly 75-80% from 2024, but almost all of that was the Eviosys purchase. Underlying 2025 sales grew only about 1-2%: higher prices added $178 million, while lower industrial volumes took away $81 million. In 2026 so far, sales are down 1.6% for the first half after the ThermoSafe sale, consumer volumes are softer, and industrial volume and mix are flat. We therefore assume no growth in year one of the base case. We gave no credit for management's merger-savings targets, its profitability plan or any margin expansion, because none of these is yet delivered. Debt. At December 31, 2025, Sonoco owed $4.33 billion in loans and bonds and held $378 million of cash. We treat $150 million of that cash as needed to run the business. We then add the $15 million TFP working-capital settlement, about $103 million of tax on the sale gains paid in 2026, and $18 million owed to outside owners of subsidiaries. That gives about $4.23 billion, or $42.53 a share. Much of the bond debt carries fixed coupons well below 6%: 2.25% due February 2027, 4.60% due 2029, 3.125% due 2030, 2.85% due 2032 and 5.00% due 2034. That cheap financing is worth about $207 million, which brings the effective debt to about $4.03 billion, or $40.45 a share. Other maturities include $500 million of 4.45% notes that were due September 2026 and a $500 million term loan due August 2028. Debt is roughly 3.3 times 2025 operating earnings before depreciation and amortization (about $1.29 billion), and every case below covers its interest comfortably. Bear case ($17.68). The industrial tube, core and paperboard business keeps losing volume, as it did in 2025, and European food cans, a mature market, keep shrinking. Merger savings fall short and Sonoco keeps paying to close plants, as it did in 2024 and 2025 when it shut sites in France, Spain, Mexico, Greece and the United States. In this case cash flow starts at $5.20 a share, falls 2% a year for ten years, then falls 3% a year after that. The cheap bonds are assumed to be refinanced at market rates. The business is worth about $60.21 a share ($6.0 billion), it owes $42.53, and $17.68 is left for shareholders. Base case ($52.62). Contract price pass-through on steel, aluminium and paper roughly offsets slow volume erosion, so cash flow before interest holds flat at $6.10 a share for ten years. After that it declines about 1% a year as volume erosion outruns pricing. We expect the earning power to last because Sonoco has run these product lines for decades; the company dates to 1899. The business is worth about $93.07 a share ($9.3 billion), it owes $40.45, and $52.62 is left for shareholders. Bull case ($83.23). The plant closures already carried out and the 95% utilization at the North American paperboard mills raise the starting level to $6.60. Price pass-through, which Sonoco has a contractual right to and a record of using, then lifts cash flow 1.5% a year for ten years, after which it holds flat. The business is worth about $123.68 a share ($12.3 billion), it owes $40.45, and $83.23 is left for shareholders. Change since our previous estimate. Our August 2026 estimate put the base value at $13.26. That figure counted the debt twice: it used earnings that had already paid interest and then also subtracted the debt. It also used higher discount rates. We now value the business before its lenders are paid, subtract the debt once, and discount every case at a flat 6%. We also corrected 2025 earnings for the one-time tax on the sale gains. Our growth assumptions are lower than before: we now assume no base-case growth, where we previously assumed 3%. Margin-of-safety price. With values ranging from about $18 to $83, and debt still heavy after the Eviosys purchase, the margin-of-safety price is about $30. At that price the dividend, currently about $2.12 a year, yields roughly 7%. If the base case plays out over three to five years, the base case implies total returns near or above 20% a year from that price, and the price is still about 70% above the bear value. What would make this wrong: a structural loss of a major can or canister customer, European food can volumes falling much faster than 2% a year, or another large debt-funded acquisition before the balance sheet is repaired. Sonoco has a long record of acquiring and divesting businesses, so that last risk is real.