Avery Dennison Corporation (AVY - Free Report) reported first-quarter 2021 adjusted earnings of $2.40 per share, surpassing the Zacks Consensus Estimate of $2.01 by a margin of 19%. The bottom line also improved 45% year over year driven by significant margin expansion in all of its segments and its cost-saving actions.
Including one-time items, the company reported earnings per share of $2.50 compared with $1.60 in the year-ago quarter.
Total revenues increased 19% year over year to $2.05 billion and beat the Zacks Consensus Estimate of $1.92 billion. Sales were up 8.8% on an organic basis.
Cost of sales in the quarter improved 17.5% year over year to $1,454 million. Gross profit climbed 23% year over year to $597 million. Gross margin expanded 90 basis points year over year to 29.1% in the first quarter.
Marketing, general and administrative expenses were around $312 million compared with $281 million incurred in the year-ago quarter. Adjusted operating profit amounted to around $285 million, up 39.5% from the $204 million in the prior-year quarter. Adjusted operating margin was 13.9% in the quarter, up 210 basis points from the prior-year quarter.
Segment Highlights
Revenues in the Label and Graphic Materials (LGM) segment increased 17% year over year to $1,377 million in the reported quarter. Label and Packaging Materials sales were up 7%, with strong growth witnessed in both the high value product categories and the base business. Sales rose 9% in the combined Graphics and Reflective Solutions businesses. On an organic basis, sales were up 7.6%. Adjusted operating profit increased 29% year on year to $224 million.
Revenues in the Retail Branding and Information Solutions (RBIS) segment advanced 20% year over year to $483 million. On an organic basis, sales were up 9.3% reflecting strong growth in both the high value categories and the base business. The segment’s adjusted operating income soared 82% year over year to $62 million.
Net sales in the Industrial and Healthcare Materials (IHM) segment totaled $192 million, up 30% from $148 million in the prior-year quarter. This reflects a 20% increase in industrial categories and a low-single digit decline in healthcare categories. The segment reported adjusted operating income of $23.6 million compared with the prior-year quarter’s $15.4 million.
Financial Updates
Free cash flow in the reported quarter was $182 million compared with an usage of $35.3 million in the prior-year quarter. Avery Dennison recently raised its quarterly dividend rate by 10%. The company has repurchased 0.3 million shares in the first quarter for $56 million.
Avery Dennison ended the first quarter with cash and cash equivalents of $328 million compared with $742 million at the end of the prior-year quarter. As of the end of first-quarter 2021, the company’s net debt to adjusted EBITDA ratio was 1.6, well below the company’s long-term target of 2.3-2.6.
Guidance
Backed by strong performance in the first quarter and a higher organic growth assumption for the balance of the year, Avery Dennison now expects earnings per share between $8.40 to $8.80 in 2021 compared with the prior guidance of $7.65 to $8.05. The mid-point of the guidance range reflects year-over-year growth of 21%.
Price Performance
Shares of Avery Dennison have gained 78.1% in the past year, compared with the industry’s rally of 66%.
Zacks Rank and Stocks to Consider
Avery Dennison currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector include Dover Corporation (DOV - Free Report) , Caterpillar Inc. (CAT - Free Report) and Pentair plc (PNR - Free Report) , each carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dover has a projected earnings growth rate of 21.8% for 2021. Over the past year, the company’s shares have gained 56%.
Caterpillar has an estimated earnings growth rate of 25.7% for the ongoing year. The company’s shares have rallied 99% in the past year.
Pentair has an expected earnings growth rate of 11.6% for 2021. The stock has surged 86% in a year’s time.
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From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Avery Dennison Corporation (AVY - Free Report) reported first-quarter 2021 adjusted earnings of $2.40 per share, surpassing the Zacks Consensus Estimate of $2.01 by a margin of 19%. The bottom line also improved 45% year over year driven by significant margin expansion in all of its segments and its cost-saving actions.
Including one-time items, the company reported earnings per share of $2.50 compared with $1.60 in the year-ago quarter.
Total revenues increased 19% year over year to $2.05 billion and beat the Zacks Consensus Estimate of $1.92 billion. Sales were up 8.8% on an organic basis.
Cost of sales in the quarter improved 17.5% year over year to $1,454 million. Gross profit climbed 23% year over year to $597 million. Gross margin expanded 90 basis points year over year to 29.1% in the first quarter.
Marketing, general and administrative expenses were around $312 million compared with $281 million incurred in the year-ago quarter. Adjusted operating profit amounted to around $285 million, up 39.5% from the $204 million in the prior-year quarter. Adjusted operating margin was 13.9% in the quarter, up 210 basis points from the prior-year quarter.
Segment Highlights
Revenues in the Label and Graphic Materials (LGM) segment increased 17% year over year to $1,377 million in the reported quarter. Label and Packaging Materials sales were up 7%, with strong growth witnessed in both the high value product categories and the base business. Sales rose 9% in the combined Graphics and Reflective Solutions businesses. On an organic basis, sales were up 7.6%. Adjusted operating profit increased 29% year on year to $224 million.
Revenues in the Retail Branding and Information Solutions (RBIS) segment advanced 20% year over year to $483 million. On an organic basis, sales were up 9.3% reflecting strong growth in both the high value categories and the base business. The segment’s adjusted operating income soared 82% year over year to $62 million.
Net sales in the Industrial and Healthcare Materials (IHM) segment totaled $192 million, up 30% from $148 million in the prior-year quarter. This reflects a 20% increase in industrial categories and a low-single digit decline in healthcare categories. The segment reported adjusted operating income of $23.6 million compared with the prior-year quarter’s $15.4 million.
Financial Updates
Free cash flow in the reported quarter was $182 million compared with an usage of $35.3 million in the prior-year quarter. Avery Dennison recently raised its quarterly dividend rate by 10%. The company has repurchased 0.3 million shares in the first quarter for $56 million.
Avery Dennison ended the first quarter with cash and cash equivalents of $328 million compared with $742 million at the end of the prior-year quarter. As of the end of first-quarter 2021, the company’s net debt to adjusted EBITDA ratio was 1.6, well below the company’s long-term target of 2.3-2.6.
Guidance
Backed by strong performance in the first quarter and a higher organic growth assumption for the balance of the year, Avery Dennison now expects earnings per share between $8.40 to $8.80 in 2021 compared with the prior guidance of $7.65 to $8.05. The mid-point of the guidance range reflects year-over-year growth of 21%.
Price Performance
Shares of Avery Dennison have gained 78.1% in the past year, compared with the industry’s rally of 66%.
Zacks Rank and Stocks to Consider
Avery Dennison currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector include Dover Corporation (DOV - Free Report) , Caterpillar Inc. (CAT - Free Report) and Pentair plc (PNR - Free Report) , each carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dover has a projected earnings growth rate of 21.8% for 2021. Over the past year, the company’s shares have gained 56%.
Caterpillar has an estimated earnings growth rate of 25.7% for the ongoing year. The company’s shares have rallied 99% in the past year.
Pentair has an expected earnings growth rate of 11.6% for 2021. The stock has surged 86% in a year’s time.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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