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Avery Dennison (AVY) Hits 52-Week High: What's Driving It?

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On Nov 27, Avery Dennison Corporation (AVY - Free Report) crafted a 52-week high of $112.28 during intra-day trading, finally closing lower at $111.92.

Investors are optimistic on this Zacks Rank #2 (Buy) company’s focus on productivity and cost control. Its raised guidance for full-year 2017 has also boosted their confidence.

Avery Dennison has a market cap of $9.9 billion. The average volume of shares traded over the last three months is approximately 630.6K. We note that the company has beaten the Zacks Consensus Estimate in each of the trailing four quarters — the average positive earnings surprise being 6.85%.

The stock has gained 53.4% in a year’s time, higher than the S&P 500’s gain of 18.3%. Avery Dennison has also outperformed the industry’s gain of 42.2% with respect to share price movement during the same time frame.

What's Driving Avery Dennison?

During the third-quarter conference call, Avery Dennison raised its guidance for 2017 on the back of continued execution of strategies, which will enhance competitive advantage while driving profitable growth and improving returns. For 2017, the company lifted the adjusted earnings per share guidance range to $4.90-$4.95 and sales growth to around 8%.

Notably, Avery Dennison’s aggressive cost-cutting and restructuring activities are likely to lead to improved savings and boost earnings. The company anticipates incremental restructuring savings of approximately $50-$55 million in 2017.

Further, Avery Dennison believes its Industrial and Healthcare Materials segment will likely benefit from the Yongle, Finesse and Mactac acquisitions. The company also remains focused on its efforts to drive productivity. Its Label and Graphic Materials segment will likely benefit from growth in emerging market regions, including high single-digit growth in India and China.

Avery Dennison’s Retail Branding and Information Solutions segment continues to perform well on the back of its business-model transformation that has enabled it to gain share market share while driving significant margin expansion. In addition, the company has enhanced the segment’s competitiveness through strategic pricing initiatives.

Furthermore, Avery Dennison’s positive estimate revisions reflect optimism in the company’s potential, as earnings growth is often an indication of robust prospects (and stock price gains) ahead. Estimates for Avery Dennison have moved up over the past 30 days, reflecting analysts’ bullish outlook. The earnings estimate has moved up 1.9% and 2.3% for 2017 and 2018, respectively.

Other Stocks to Consider

Other top-ranked stocks in the same space include Caterpillar Inc. (CAT - Free Report) , Deere & Company (DE - Free Report) and ACCO Brands Corporation (ACCO - Free Report) . While Caterpillar and Deere flaunt a Zacks Rank of 1 (Strong Buy), ACCO Brands carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Caterpillar has a long-term earnings growth rate of 10.3%. Its shares have been up 47.9% year to date.

Deere has a long-term earnings growth rate of 8%. So far this year, its shares have rallied 44.4%.

ACCO Brands has a long-term earnings growth rate of 10%. Its shares have gained 0.7% year to date.

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