Back to top

Image: Bigstock

Avery Dennison (AVY) to Report Q3 Earnings: What's in the Offing?

Read MoreHide Full Article

Avery Dennison Corporation (AVY - Free Report) is scheduled to report third-quarter 2021 results before the opening bell on Oct 27.

Q3 Estimates

The Zacks Consensus Estimate for the third-quarter total sales is pegged at $1.98 billion, suggesting an improvement of 14.5% 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 8.4%. The estimate has remained unchanged over the past 30 days.

Q2 Performance

In the last reported quarter, Avery Dennison reported year-over-year improvements in its top and bottom lines. Earnings and revenues also beat the respective Zacks Consensus Estimate. The company has a trailing four-quarter average earnings surprise of 14.2%.

Factors at Play

Avery Dennison has been witnessing solid demand for the 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 third-quarter sales results, as around 40% of its revenues comes from these products. Focus on acquisitions and growth in high-value product categories are also likely to have contributed to the company’s performance during the September-end quarter.

The Zacks Consensus Estimate for the Label and Graphic Materials segment’s third-quarter sales is currently pegged at $1,283 million, calling for a year-over-year improvement of 12%. The segment’s Label and Packaging Materials business serves essential categories that have been seeing higher demand amid the pandemic. Volume improvement, driven by the 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 $180 million, suggesting year-over-year growth of 2.8%.

The Zacks Consensus Estimate for the Industrial and Healthcare Materials segment’s quarterly sales is pinned at $195 million, suggesting a year-over-year jump of 23.4%. The 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 $21.4 million, indicating an increase of 12%.

The Zacks Consensus Estimate for the Retail Branding and Information Solutions segment’s July-September quarter sales is pegged at $503 million, calling for an increase of 18% from the prior-year quarter's figure of $426 million. Continued strength in Radio-frequency identification, investments in digital identification technologies and external embellishments are likely to have boosted the segment’s third-quarter sales. The Zacks Consensus Estimate for the segment’s operating income stands at $64 million compared with the prior-year quarter’s $51 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 rising raw material and freight costs might have offset margin benefits during the third 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 4 (Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Share Price Performance

Avery Dennison’s shares have gained 40.9%, so far this year, compared with the industry’s growth of 29.8%.

Zacks Investment ResearchImage Source: Zacks Investment Research

Stocks Poised to Beat Earnings Estimates

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

Reliance Steel & Aluminum Co. (RS - Free Report) has an Earnings ESP of +3.54% and flaunts a Zacks Rank of 1, at present.

Columbus McKinnon Corporation (CMCO - Free Report) has an Earnings ESP of +5.26% and carries a Zacks Rank #2, currently.

Deere & Company (DE - Free Report) , currently a Zacks #2 Ranked stock, has an Earnings ESP of +5.55%.