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Avery Dennison Corporation (AVY - Free Report) reported first-quarter 2022 adjusted earnings of $2.40 per share, beating the Zacks Consensus Estimate of $2.18. The bottom line was in line year over year.
Including one-time items, the company reported earnings per share (EPS) of $2.39 compared with the year-ago quarter’s $2.50 per share.
Total revenues increased 14.5% year over year to $2,349 million, beating the Zacks Consensus Estimate of $2,299 million. Sales were up 12.7% year over year on an organic basis.
Cost of sales in the quarter rose 17% year over year to $1,708 million. The gross profit was up 7.4% year over year to $641.3 million. The gross margin contracted to 27% in the first quarter from the prior-year quarter’s 29%.
Marketing, general and administrative expenses were $355 million compared with the $312 million incurred in the year-ago quarter. The adjusted operating profit amounted to around $286 million compared with the prior-year quarter’s $285 million. The adjusted operating margin was 12.2% in the quarter compared with the year-ago quarter’s 13.9%.
Avery Dennison Corporation Price, Consensus and EPS Surprise
Revenues in the Label and Graphic Materials (LGM) segment increased 8% year over year to $1,480 million in the reported quarter. Label and Packaging Materials sales were up low-double digits from prior-year quarter’s levels, with stellar growth witnessed in the high-value product categories and the base business. Sales increased by high-single digits in the Graphics and Reflective Solutions businesses. On an organic basis, reported sales were up 12%. The segment’s adjusted operating profit declined 9% year on year to $204 million.
Revenues in the Retail Branding and Information Solutions (RBIS) segment rose 41% year over year to $679 million. On an organic basis, sales were up 20%, reflecting solid growth in both the high-value categories and the base business. The segment’s adjusted operating income was $92 million compared with the year-ago quarter’s $62 million.
Net sales in the Industrial and Healthcare Materials (IHM) segment totaled $190 million, down 1% from $192 million recorded in the prior-year quarter. The figure marks a low-single-digit decline in the industrial categories and a low-double digits increase in the healthcare categories. The segment reported an adjusted operating income of $16 million compared with the prior-year quarter’s $24 million.
Financial Updates
Free cash flow in the reported quarter was $73 million compared with the year-earlier quarter’s $182 million. The company returned $208 million in cash to shareholders through share repurchases and dividend payments in the first quarter.
Avery Dennison ended the first quarter with cash and cash equivalents of $147 million compared with $328 million at the end of the prior-year quarter. The company’s net debt to adjusted EBITDA ratio was 2.35.
Guidance
Avery Dennison now expects adjusted EPS guidance for 2022 in the band of $9.45-$9.85, up from the prior guidance of $9.35-$9.75.
Price Performance
Shares of Avery Dennison have declined 17.4% in the past year compared with the industry’s loss of 14.2%.
Image Source: Zacks Investment Research
Zacks Rank and Stocks to Consider
Avery Dennison currently carries a Zacks Rank #4 (Sell).
Alcoa has a projected earnings growth rate of 107% for the current year. The Zacks Consensus Estimate for 2022 earnings has moved north by 76% in the past 60 days.
Alcoa delivered a trailing four-quarter earnings surprise of 17.4% on average. Alcoa’s shares have surged 81% in the past year.
Sonoco has an expected earnings growth rate of 47.6% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 13% in the past 60 days.
SON has a trailing four-quarter earnings surprise of 1.85%, on average. SON’s shares have declined 4.5% in the past year.
Greif has an estimated earnings growth rate of 16% for fiscal 2022. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 4.2%.
GEF pulled off a trailing four-quarter earnings surprise of 14.7%, on average. The company’s shares have appreciated 5% in a year’s time.
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Avery Dennison (AVY) Tops Q1 Earnings Estimates, Ups '22 View
Avery Dennison Corporation (AVY - Free Report) reported first-quarter 2022 adjusted earnings of $2.40 per share, beating the Zacks Consensus Estimate of $2.18. The bottom line was in line year over year.
Including one-time items, the company reported earnings per share (EPS) of $2.39 compared with the year-ago quarter’s $2.50 per share.
Total revenues increased 14.5% year over year to $2,349 million, beating the Zacks Consensus Estimate of $2,299 million. Sales were up 12.7% year over year on an organic basis.
Cost of sales in the quarter rose 17% year over year to $1,708 million. The gross profit was up 7.4% year over year to $641.3 million. The gross margin contracted to 27% in the first quarter from the prior-year quarter’s 29%.
Marketing, general and administrative expenses were $355 million compared with the $312 million incurred in the year-ago quarter. The adjusted operating profit amounted to around $286 million compared with the prior-year quarter’s $285 million. The adjusted operating margin was 12.2% in the quarter compared with the year-ago quarter’s 13.9%.
Avery Dennison Corporation Price, Consensus and EPS Surprise
Avery Dennison Corporation price-consensus-eps-surprise-chart | Avery Dennison Corporation Quote
Segment Highlights
Revenues in the Label and Graphic Materials (LGM) segment increased 8% year over year to $1,480 million in the reported quarter. Label and Packaging Materials sales were up low-double digits from prior-year quarter’s levels, with stellar growth witnessed in the high-value product categories and the base business. Sales increased by high-single digits in the Graphics and Reflective Solutions businesses. On an organic basis, reported sales were up 12%. The segment’s adjusted operating profit declined 9% year on year to $204 million.
Revenues in the Retail Branding and Information Solutions (RBIS) segment rose 41% year over year to $679 million. On an organic basis, sales were up 20%, reflecting solid growth in both the high-value categories and the base business. The segment’s adjusted operating income was $92 million compared with the year-ago quarter’s $62 million.
Net sales in the Industrial and Healthcare Materials (IHM) segment totaled $190 million, down 1% from $192 million recorded in the prior-year quarter. The figure marks a low-single-digit decline in the industrial categories and a low-double digits increase in the healthcare categories. The segment reported an adjusted operating income of $16 million compared with the prior-year quarter’s $24 million.
Financial Updates
Free cash flow in the reported quarter was $73 million compared with the year-earlier quarter’s $182 million. The company returned $208 million in cash to shareholders through share repurchases and dividend payments in the first quarter.
Avery Dennison ended the first quarter with cash and cash equivalents of $147 million compared with $328 million at the end of the prior-year quarter. The company’s net debt to adjusted EBITDA ratio was 2.35.
Guidance
Avery Dennison now expects adjusted EPS guidance for 2022 in the band of $9.45-$9.85, up from the prior guidance of $9.35-$9.75.
Price Performance
Shares of Avery Dennison have declined 17.4% in the past year compared with the industry’s loss of 14.2%.
Image Source: Zacks Investment Research
Zacks Rank and Stocks to Consider
Avery Dennison currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Industrial Products sector are Alcoa (AA - Free Report) , Sonoco Products Company (SON - Free Report) and Greif Inc. (GEF - Free Report) . While AA and SON flaunt a Zacks Rank #1 (Strong Buy), GEF carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Alcoa has a projected earnings growth rate of 107% for the current year. The Zacks Consensus Estimate for 2022 earnings has moved north by 76% in the past 60 days.
Alcoa delivered a trailing four-quarter earnings surprise of 17.4% on average. Alcoa’s shares have surged 81% in the past year.
Sonoco has an expected earnings growth rate of 47.6% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 13% in the past 60 days.
SON has a trailing four-quarter earnings surprise of 1.85%, on average. SON’s shares have declined 4.5% in the past year.
Greif has an estimated earnings growth rate of 16% for fiscal 2022. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 4.2%.
GEF pulled off a trailing four-quarter earnings surprise of 14.7%, on average. The company’s shares have appreciated 5% in a year’s time.