Sonoco Products (SON) moved higher today despite disappointing second-quarter results. The fact is industrial stocks have held up well today, and the earnings miss was already discounted in SON’s stock price. The company reported EPS of $1.38, vs. $1.76 last year, on an 11% decline in revenues, which was $0.10 below earnings expectations. The weak earnings are primarily due its customers continuing to work off excess inventories, which has been a common theme for many industrial companies this year.

While profit margins contracted with the lower revenues, profitability held in relatively well. I think that reflects favorably on SON’s ability to execute from an operational standpoint.

However, the company lowered its EPS guidance for the year, reflecting a lower ability to pass on cost increases and weaker volume in consumer and paper packaging businesses. EPS for the year is now expected to be $5.10 vs. previous estimates of $5.40 and analysts’ expectations of $5.77 going into the earnings report.

The stock is still cheap based on this new guidance, and next year has a good chance to see earnings rebound to around $5.70 as customers rebuild inventory and price pressures lessen. Given the near-term challenges, I am reducing my buy under price for SON to $60 and my target to $70. I remain very optimistic about the long-term outlook.

Sysco (SYY) has been volatile today but is currently little changed after reporting fiscal fourth-quarter results. The company announced EPS of $1.34, vs. $1.15 last year, on a 4.1% increase in revenues, which were close to expectations for EPS of $1.33 and a 5.4% increase in revenues. The top line benefitted from market share gains, and margins were lifted in the quarter by continued efforts to improve efficiency and take costs out of the supply chain. The company’s international business was particularly strong, with sales up 12.2%.

Assuming the economy can stay healthy, I think EPS can increase to $4.40 in the current fiscal year, with low- to mid-single digit sales growth and continued margins expansion. Keeping in mind the stock remains well off its 52-week high of $87.41, SYY is a buy below $80 and my target is $92.