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Shares of Avery Dennison Corporation (AVY - Free Report) scaled a fresh 52-week high of $179.31 during the Feb 16 trading session, before retracting to close at $179.11. The company’s forecast topping fourth-quarter 2020 results, pandemic-driven demand for essential categories, cost-control actions as well as focus on growing its high-value products have contributed to this rally.
Share Price Performance
Shares of the company have gained 34.2% over the past year, outperforming the industry’s growth of 8%.
Earnings & Sales Top Estimates in Q4
The company reported fourth-quarter adjusted earnings of $2.27 per share, surpassing the Zacks Consensus Estimate of $2.17. The bottom line also improved 31% year over year on robust demand in the Label and Packaging Materials and industrial categories, growth in high value categories and the company’s cost-saving actions. Total revenues of $1.99 billion also beat the Zacks Consensus Estimate of $1.93 billion and increased 12% year over year.
Notably, Avery Dennison has a trailing four-quarter average earnings surprise of 17.18%.
Upbeat Outlook: Avery Dennison expects earnings per share between $7.65 and $8.05 for the current year. The mid-point of the range reflects year-over-year growth of 11%. Given the continued recovery in end markets across the segments, management expects organic sales growth to be approximately 3-7% for the ongoing year.
Driving Factors
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. Apart from this, around 15% of its revenues is tied to logistics and shipping, which will be aided by rise in e-commerce activities.
The company’s Label and Packaging Materials segment is well poised for growth on solid top-line performance and continued margin expansion, volume improvement, focus on high-value categories led by specialty labels, contributions from productivity initiatives as well as pandemic-driven demand for essential products. Moreover, the company closed the ACPO acquisition in the December-end quarter, which fortified its position in the North American label and graphics materials business.
Avery Dennison 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 term.
Along with its restructuring efforts, 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.
Positive Growth Projections
The Zacks Consensus Estimate for 2021 earnings per share is currently pegged at $7.85, indicating growth of 10.6% from the prior year.
Zacks Rank & Other Stocks to Consider
Avery Dennison currently carries a Zacks Rank #2 (Buy).
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. In the past year, the stock has gained 23%.
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Avery Dennison (AVY) Hits 52-Week High: What's Driving It?
Shares of Avery Dennison Corporation (AVY - Free Report) scaled a fresh 52-week high of $179.31 during the Feb 16 trading session, before retracting to close at $179.11. The company’s forecast topping fourth-quarter 2020 results, pandemic-driven demand for essential categories, cost-control actions as well as focus on growing its high-value products have contributed to this rally.
Share Price Performance
Shares of the company have gained 34.2% over the past year, outperforming the industry’s growth of 8%.
Earnings & Sales Top Estimates in Q4
The company reported fourth-quarter adjusted earnings of $2.27 per share, surpassing the Zacks Consensus Estimate of $2.17. The bottom line also improved 31% year over year on robust demand in the Label and Packaging Materials and industrial categories, growth in high value categories and the company’s cost-saving actions. Total revenues of $1.99 billion also beat the Zacks Consensus Estimate of $1.93 billion and increased 12% year over year.
Notably, Avery Dennison has a trailing four-quarter average earnings surprise of 17.18%.
Upbeat Outlook: Avery Dennison expects earnings per share between $7.65 and $8.05 for the current year. The mid-point of the range reflects year-over-year growth of 11%. Given the continued recovery in end markets across the segments, management expects organic sales growth to be approximately 3-7% for the ongoing year.
Driving Factors
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. Apart from this, around 15% of its revenues is tied to logistics and shipping, which will be aided by rise in e-commerce activities.
The company’s Label and Packaging Materials segment is well poised for growth on solid top-line performance and continued margin expansion, volume improvement, focus on high-value categories led by specialty labels, contributions from productivity initiatives as well as pandemic-driven demand for essential products. Moreover, the company closed the ACPO acquisition in the December-end quarter, which fortified its position in the North American label and graphics materials business.
Avery Dennison 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 term.
Along with its restructuring efforts, 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.
Positive Growth Projections
The Zacks Consensus Estimate for 2021 earnings per share is currently pegged at $7.85, indicating growth of 10.6% from the prior year.
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) , each carrying a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) 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. In the past year, the stock has gained 23%.
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.
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