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Avery Dennison (AVY) to Acquire JDC Solutions for $24 Million

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Avery Dennison Corporation (AVY - Free Report) is set to acquire JDC Solutions, Inc. for $24 million.

Based in Mount Juliet, TN, JDC manufactures pressure-sensitive specialty tapes and generates annual revenues of around $30 million. Its specialty tapes are used in a wide range of high-value industrial applications. In fact, JDC has long-standing relationships with U.S. converters focused on serving the automotive, consumer appliance, as well as building and construction industries among others.

Following the buyout, JDC will become part of Avery Dennison’s Performance Tapes North America business. The deal is likely to close in the current quarter.

Last month, Avery Dennison acquired majority assets of Ohio-based ACPO Ltd. for $87.6 million. This transaction will fortify Avery Dennison’s leading position in the core label material segments.

The company recently reported fourth-quarter 2020 results, wherein its earnings and sales beat the respective Zacks Consensus Estimate and increased year over year as well. It projects earnings per share between $7.65 and $8.05 for 2021. The mid-point of the range reflects year-over-year growth of 11%.

Labelling of non-durable consumer goods like food, beverage, home and personal care products account for around 40% of Avery Dennison’s revenues. The company has been witnessing soaring demand for these products amid the pandemic. Over the long term, growing demand from emerging markets on the back of rising middle class, and the consequent surge in demand for packaged goods and shift in labelling technology to pressure-sensitive materials will fuel the company’s growth. Also, around 15% of its revenues is tied to logistics and shipping, which will be aided by rise in e-commerce activities.

Moreover, the company will benefit from its rapidly-growing high-value product categories, such as specialty labels and Radio-frequency identification (RFID). Continued strength in RFID and external embellishments will boost the Retail Branding and Information Solutions (RBIS) segment. Apart from this, the company’s acquisition of Smartrac’s Transponder (RFID Inlay) Division will generate higher revenues, with the RFID business anticipated to be up 15-20% annually over the long run.

Along with its strategic restructuring efforts to position the company for long-term growth, Avery Dennison has undertaken temporary cost-containment actions to negate the impact of waning demand in some of the company’s businesses due to the pandemic.

Price Performance

Shares of Avery Dennison have gained 28.3% in the past year, outperforming the industry’s growth 3.2%.



Zacks Rank & Other Stocks to Consider

Avery Dennison currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the Industrial Products sector include AGCO Corporation (AGCO - Free Report) , Crown Holdings, Inc. (CCK - Free Report) and AptarGroup, Inc. (ATR - Free Report) . While AGCO Corporation currently sports a Zacks Rank #1 (Strong Buy), Crown Holdings and AptarGroup carry a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

AGCO Corporation has a projected earnings growth rate of 11.4% for the current year. Shares of the company have soared 83% over the past year.

Crown Holdings has an estimated earnings growth rate of 12.8% for 2021. The company’s shares have gained 16.9% in a year’s time.

AptarGroup has an expected earnings growth rate of 14.4% for the ongoing year. Over the past year, the stock has gained 23%.

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