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Avery Dennison (AVY) Gains 43% in a Year: What's Driving It?

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Shares of Avery Dennison Corporation (AVY - Free Report) appreciated around 43% over the last year. The company has also outperformed its industry's growth of 35%.  
 
Avery Dennison has a market cap of nearly $10 billion and average volume of shares traded over the past three months is around 656K. The company has expected long-term earnings per share growth rate of 7%.
 
Let's take a look into the factors that are driving this Zacks Rank #1 (Strong Buy) stock. 
 
 
Driving Factors
 
Avery Dennison’s share price performance has been fueled by better-than-expected performance in the last reported quarter and upbeat outlook for 2018.
 
The producer of pressure-sensitive materials, and a variety of tickets, tags, labels and other converted products reported adjusted earnings of $1.33 per share in fourth-quarter 2017, up 34% from 99 cents recorded in the year-ago quarter. Earnings also beat the Zacks Consensus Estimate of $1.25. Total revenues jumped around 11.9% to $1.74 billion from $1.55 billion recorded in the year-earlier quarter, driven by contributions from acquisitions and organic growth. Moreover, the figure surpassed the Zacks Consensus Estimate of $1.70 billion. On an organic basis, sales were up nearly 4.7% year over year.
 
Avery Dennison Corporation Price and Consensus
 
Avery Dennison Corporation Price and Consensus

Avery Dennison Corporation price-consensus-chart | Avery Dennison Corporation Quote

 

For 2018, Avery Dennison guided its adjusted earnings per share range of $5.70-$5.95. The company expects to deliver strong top-line and double-digit EPS growth this year. It remains confident about the continued execution of strategies which will help achieve profitable growth and improve returns. The mid-point of the guidance range reflects year-over-year growth of 17%.

Roughly half of Avery Dennison’s sales are now linked to either any or both of its presence in emerging markets and faster-growing high-value categories, such as specialty labels, industrial tapes and Radio-frequency identification (“RFID”). Above-average growth is projected from both, over the longer term. Focus on productivity, acquisitions, aggressive cost control and share repurchases will be conducive to the company's results. Furthermore, its consistent execution of strategies continues to enhance competitive advantage while driving profitable growth.
 
The Label and Graphic Materials segment is its largest and highest-return business. This segment will maintain strong top-line growth and continued margin expansion, aided by improvement in emerging markets, company’s strategic focus on high-value categories (including specialty labels) and the ongoing contribution from productivity initiatives.
 
The Industrial and Healthcare Materials segment is poised to benefit from the Yongle, Finesse and Mactac acquisitions. The company is focusing on efforts to drive productivity while continuing to invest in supporting growth. It expects this segment to achieve operating margins at the levels or even higher than the Label and Graphic Materials segment.
 
Despite a challenging retail environment, the Retail Branding and Information Solutions segment continues to perform well on the back of the business-model transformation that has enabled it to gain market share, while driving significant margin expansion as well as continued strength in RFID.
 
Other Stocks to Consider
 
Other top-ranked companies in the industrial products space include Mobile Mini, Inc. , Zebra Technologies Corporation (ZBRA - Free Report) , and Heritage-Crystal Clean, Inc , all sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
 
Mobile Mini has an expected long-term earnings growth rate of 14%. Its shares have rallied 42% over the past year.
 
Zebra Technologies has an expected long-term earnings growth rate of 7.5%. Its share price has appreciated 58% during the same time frame.
 
Heritage-Crystal Clean has an expected long-term earnings growth rate of 16.2%. Its shares have soared 71% in a year’s time.
 
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