Sonoco Products (NYSE:SON) versus Smurfit Westrock (NYSE:SW) Critical Analysis

Smurfit Westrock (NYSE:SW) and Sonoco Products (NYSE:SON) are both basic materials companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, valuation, risk, institutional ownership, earnings, analyst recommendations and dividends.

Profitability

This table compares Smurfit Westrock and Sonoco Products’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Smurfit Westrock	1.36%	7.13%	2.67%
Sonoco Products	5.57%	20.10%	6.73%

Earnings and Valuation

This table compares Smurfit Westrock and Sonoco Products”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Smurfit Westrock	$20.31 billion	1.16	-$22.40 million	$0.91	49.88
Sonoco Products	$6.61 billion	0.81	$474.96 million	$3.96	13.69

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

Institutional and Insider Ownership

83.4% of Smurfit Westrock shares are owned by institutional investors. Comparatively, 77.7% of Sonoco Products shares are owned by institutional investors. 0.5% of Smurfit Westrock shares are owned by company insiders. Comparatively, 0.5% of Sonoco Products shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Smurfit Westrock pays an annual dividend of $1.21 per share and has a dividend yield of 2.7%. Sonoco Products pays an annual dividend of $2.08 per share and has a dividend yield of 3.8%. Smurfit Westrock pays out 133.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sonoco Products pays out 52.5% of its earnings in the form of a dividend. Sonoco Products is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Smurfit Westrock and Sonoco Products, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Smurfit Westrock	0	3	3	0	2.50
Sonoco Products	1	0	2	0	2.33

Smurfit Westrock presently has a consensus target price of $56.50, suggesting a potential upside of 24.48%. Sonoco Products has a consensus target price of $59.00, suggesting a potential upside of 8.84%. Given Smurfit Westrock’s stronger consensus rating and higher probable upside, research analysts clearly believe Smurfit Westrock is more favorable than Sonoco Products.

Volatility & Risk

Smurfit Westrock has a beta of 1.05, meaning that its share price is 5% more volatile than the S&P 500. Comparatively, Sonoco Products has a beta of 0.68, meaning that its share price is 32% less volatile than the S&P 500.

About Smurfit Westrock

Smurfit Westrock Plc, together with its subsidiaries, manufactures, distributes, and sells containerboard, corrugated containers, and other paper-based packaging products in Ireland and internationally. The company produces containerboard that it converts into corrugated containers or sells to third parties, as well as produces other types of paper, such as consumer packaging board, sack paper, graphic paper, solid board and graphic board, and other paper-based packaging products, such as consumer packaging, solid board packaging, paper sacks, and other packaging products, including bag-in-box. It also produces linerboard and corrugated medium, paperboard, and non-packaging grades of paper, as well as converted products, such as folding cartons and corrugated boxes, and other products; recycled paper-based packaging products; and packaging machinery. The company primarily serves food and beverage, e-commerce, retail, consumer goods, industrial, and foodservice markets. Smurfit Westrock Plc was founded in 1934 and is headquartered in Dublin, Ireland.

About Sonoco Products

Sonoco Products Company, together with its subsidiaries, designs, develops, manufactures, and sells various engineered and sustainable packaging products in North and South America, Europe, Australia, and Asia. The company operates Consumer Packaging and Industrial Paper Packaging segments. The Consumer Packaging segment offers round and shaped rigid paper, steel, and plastic containers; metal and peelable membrane ends, closures, and components; thermoformed plastic trays and enclosures; and high-barrier flexible packaging products. The Industrial Paper Packaging segment provides paperboard tubes, cones, and cores; paper-based protective packaging products; and uncoated recycled paperboard products. It also offers various packaging materials, including plastic, paper, foam, and other specialty materials. Sonoco Products Company sells its products in various markets, which include paper, textile, film, food, packaging, construction, and wire and cable. The company was founded in 1899 and is headquartered in Hartsville, South Carolina.