Back to top

Image: Bigstock

Avery Dennison (AVY) to Report Q3 Earnings: What to Expect?

Read MoreHide Full Article

Avery Dennison Corporation (AVY - Free Report) is scheduled to report third-quarter 2020 results before the opening bell on Oct 21.

Q3 Estimates

The Zacks Consensus Estimate for third-quarter total sales is pegged at $1.70 billion, suggesting a decline of 3% from the prior-year quarter. The consensus mark for the company’s earnings per share is pegged at $1.51, indicating a slump of 9% from the year-ago reported figure. Notably, the estimate has gone up 3% over the past 30 days.

Q2 Performance

In the last reported quarter, Avery Dennison reported year-over-year decline in both its top and bottom lines. However, both revenues and earnings beat the respective Zacks Consensus Estimate.

Avery Dennison has an impressive earnings surprise history. It beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 7.7%.

Avery Dennison Corporation Price and EPS Surprise

Avery Dennison Corporation Price and EPS Surprise

Avery Dennison Corporation price-eps-surprise | Avery Dennison Corporation Quote

Factors to Note

The Zacks Consensus Estimate for the Industrial and Healthcare Materials (IHM) segment’s quarterly sales is pegged at $151 million, suggesting a year-over-year decline of 11%. The segment’s operating income is anticipated to decline 19% year over year to $14 million. The overall weakness in the U.S manufacturing sector primarily owing to the coronavirus pandemic might have limited demand for the segment’s products in the quarter to be reported.

The Zacks Consensus Estimate for the Label and Graphic Materials (LGM) segment’s third-quarter sales is currently pegged at $1,144 million, suggesting a year-over-year decline of 3%. The Zacks Consensus Estimate for the segment’s operating income stands at $159 million, flat compared with the prior-year quarter. The segment’s Label and Packaging Materials business serves essential categories that have been experiencing higher demand amid the coronavirus pandemic. Volume improvement, focus on high-value categories led by specialty labels, and contributions from productivity initiatives might have benefited the segment’s third-quarter performance. However, low demand in the Graphics Solutions business might have negated some these gains.

The company’s Retail Branding and Information Solutions business, which primarily serves apparel markets, has been witnessing significant decline in demand, reflecting widespread retail store and apparel manufacturing closures amid the pandemic. This is likely to get reflected in the to-be-reported quarter’s results.

The Zacks Consensus Estimate for the Retail Branding and Information Solutions segment’s third-quarter sales is pegged at $403 million, suggesting a decline of 1% from the prior-year quarter's figure of $407 million. The Zacks Consensus Estimate for the segment’s operating income stands at $37.5 million, indicating a decline of 18% from the year-ago reported figure.

Nevertheless, the company is likely to have benefited from acquisitions and growth in high-value product categories during the July-September period. Further, Avery Dennison’s cost-reduction initiatives and restructuring activities might have boosted savings, in turn, driving the bottom line during this period.

Earnings Whispers

Our proven model conclusively predicts an earnings beat for Avery Dennison this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Avery Dennison is +1.94%.

Zacks Rank: Avery Dennison currently carries a Zacks Rank of 2.

Share Price Performance

Avery Dennison’s shares have gained 16.4% in the past year against the industry’s decline of 4.2%.

Other Stocks Poised to Beat Earnings Estimates

Here are some other Industrial Product stocks, which you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat in their upcoming releases:

AGCO Corporation (AGCO - Free Report) has an Earnings ESP of +6.07% and a Zacks Rank of 1, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lindsay Corporation (LNN - Free Report) , currently a Zacks #2 Ranked stock, has an Earnings ESP of +11.01%.

Pentair plc (PNR - Free Report) has a Zacks Rank #2 and an Earnings ESP of +4.15%, at present.

Legal Marijuana: An Investor’s Dream

Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.

Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.

Download Marijuana Moneymakers FREE >>