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What's in the Cards for Avery Dennison's (AVY) Q2 Earnings?

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Avery Dennison Corporation (AVY - Free Report) is scheduled to report second-quarter 2021 results before the opening bell on Jul 28.

Q2 Estimates

The Zacks Consensus Estimate for second-quarter total sales is pegged at $1.96 billion, suggesting an improvement of 28% from the prior-year period. The consensus mark for the company’s earnings per share is pinned at $2.07, indicating year-over-year growth of 63%., The estimate has remained unchanged over the past 30 days.

Q1 Performance

In the last reported quarter, Avery Dennison reported year-over-year improvements in both its bottom and top lines. Earnings and revenues also beat the respective Zacks Consensus Estimate. The company has a trailing four quarters average earnings surprise of 15.3%.

Factors At Play

Avery Dennison has been witnessing solid demand for labelling of non-durable consumer goods like food, beverage, home and personal care products in response to the pandemic. This is likely to get reflected in the company’s second-quarter sales results, as around 40% of its revenues comes from these products. Focus on acquisitions and growth in high-value product categories is also likely to have contributed to the company’s performance during the June-end quarter.

The Zacks Consensus Estimate for the Label and Graphic Materials segment’s second-quarter sales is currently pegged at $1,302 million, calling for a year-over-year improvement of 18.1%. The segment’s Label and Packaging Materials business serves essential categories that have been seeing higher demand amid the pandemic. Volume improvement, driven by surging e-commerce activities, focus on high-value categories led by specialty labels and productivity initiatives, is anticipated to have buoyed the segment’s sales during the quarter under review. The Zacks Consensus Estimate for the segment’s operating income is pegged at $194 million, suggesting a year-over-year increase of 40.5%.

The Zacks Consensus Estimate for the Industrial and Healthcare Materials segment’s quarterly sales is pinned at $182 million, suggesting a year-over-year jump of 37.8%. Rebound in demand for industrial products after last year’s pandemic-induced slump is likely to have translated into improved order levels for the segment in the quarter to be reported. The segment’s Zacks Consensus Estimate for operating income is pegged at $21.5 million, indicating significant year-over-year growth of 187%.

The Zacks Consensus Estimate for the Retail Branding and Information Solutions segment’s April-June quarter sales is pegged at $471 million, calling for an increase of 59.6% from the prior-year quarter's figure of $295 million. Continued strength in Radio-frequency identification, investments in digital identification technologies and external embellishments are expected to have boosted the segment’s second-quarter sales. The Zacks Consensus Estimate for the segment’s operating income stands at $59 million as against the prior-year quarter’s operating loss of $10.7 million.

Avery Dennison has been executing various long-term productivity and temporary cost-saving actions amid the coronavirus crisis. This is likely to have boosted the segment’s margins and earnings performance during the quarter in discussion. Nevertheless, supply chain related challenges as well as escalating raw material and freight costs might have offset margin benefits during the second quarter.

Avery Dennison Corporation Price and EPS Surprise

Avery Dennison Corporation Price and EPS Surprise

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

What the Zacks Model Unveils

Our proven model does not conclusively predict 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 but that is not the case here.

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

Earnings ESP: Avery Dennison has an Earnings ESP of 0.00%.

Zacks Rank: Avery Dennison currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Share Price Performance

Avery Dennison’s shares have gained 69.5% in the past year compared with the industry’s growth of 69%.

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Stocks Poised to Beat Earnings Estimates

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

Pentair plc (PNR - Free Report) has an Earnings ESP of +0.28% and sports a Zacks Rank #1, currently.

Terex Corporation (TEX - Free Report) has an Earnings ESP of +15.41% and carries a Zacks Rank of 2, at present.

W.W. Grainger, Inc. (GWW - Free Report) , currently a Zacks #2 Ranked stock, has an Earnings ESP of +0.71%.