We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Avery Dennison (AVY) Down 11.3% Since Last Earnings Report: Can It Rebound?
Read MoreHide Full Article
A month has gone by since the last earnings report for Avery Dennison (AVY - Free Report) . Shares have lost about 11.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Avery Dennison due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Avery Dennison Q4 Earnings Miss Estimates, Down Y/Y
Avery Dennison reported fourth-quarter 2021 adjusted earnings of $2.13 per share, missing the Zacks Consensus Estimate of $2.15. The bottom line declined 6% on a year-over-year basis.
Including one-time items, the company reported earnings per share (EPS) of $2.19 compared with the year-ago quarter’s $2.28 per share.
Total revenues increased 9.7% year over year to $2.18 billion, beating the Zacks Consensus Estimate of $2.14 billion. Sales were up 12.8% year over year on an organic basis.
Cost of sales in the quarter rose 13% year over year to $1,598 million. The gross profit was up 2.5% year over year to $585 million. The gross margin contracted to 27% in the fourth quarter from the prior-year quarter’s 29%.
Marketing, general and administrative expenses were $332 million compared with the $302 million incurred in the year-ago quarter. The adjusted operating profit amounted to around $253 million, down 6% from the prior-year quarter’s $269 million. The adjusted operating margin was 11.6% in the quarter compared with the year-ago quarter’s 13.5%.
Segment Highlights
Revenues in the Label and Graphic Materials (LGM) segment increased 2.8% year over year to $1,331 million in the reported quarter. Label and Packaging Materials sales were up low-double digits from prior-year quarter’s levels, with stellar growth witnessed in the high-value product categories and the base business.
Sales increased by low-double digits in the Graphics and Reflective Solutions businesses. On an organic basis, reported sales were up 11%. The segment’s adjusted operating profit declined 17% year on year to $165 million.
Revenues in the Retail Branding and Information Solutions (RBIS) segment grew 29.7% year over year to $659.1 million. On an organic basis, sales were up 20%, reflecting solid growth in both the high-value categories and the base business. The segment’s adjusted operating income was $89 million compared with the year-ago quarter’s $79.6 million.
Net sales in the Industrial and Healthcare Materials (IHM) segment totaled $193 million, up 2% from the $188 million recorded in the prior-year period. The figure marks a mid-single-digit increase in the industrial categories and mid-teens increase in the healthcare categories. The segment reported an adjusted operating income of $18 million compared with the prior-year quarter’s $23.1 million.
Financial Updates
Free cash flow in the reported quarter was $159 million compared with the year-earlier quarter’s $206 million. The company returned $402 million in cash to shareholders through share repurchases and dividend payments in 2021.
Avery Dennison ended 2021 with cash and cash equivalents of $163 million compared with $252 million at the end of 2020. As of the end of 2021, the company’s net debt to adjusted EBITDA ratio was 2.2, below the lower end of the company’s long-term target of 2.3-2.6.
2021 Performance
Avery Dennison reported an adjusted EPS of $8.91 in 2021 compared with $7.10 reported in the prior year. Earnings missed the Zacks Consensus Estimate of $8.94. Including one-time items, the bottom line came in at $8.83, up 34% from $6.61 reported in 2020.
Sales were up 21% year over year to $8.4 billion. The top line came in line with the Zacks Consensus Estimate.
Guidance
Avery Dennison expects adjusted EPS guidance for 2022 in the band of $9.35-$9.75.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -14.94% due to these changes.
VGM Scores
At this time, Avery Dennison has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Avery Dennison has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Avery Dennison (AVY) Down 11.3% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Avery Dennison (AVY - Free Report) . Shares have lost about 11.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Avery Dennison due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Avery Dennison Q4 Earnings Miss Estimates, Down Y/Y
Avery Dennison reported fourth-quarter 2021 adjusted earnings of $2.13 per share, missing the Zacks Consensus Estimate of $2.15. The bottom line declined 6% on a year-over-year basis.
Including one-time items, the company reported earnings per share (EPS) of $2.19 compared with the year-ago quarter’s $2.28 per share.
Total revenues increased 9.7% year over year to $2.18 billion, beating the Zacks Consensus Estimate of $2.14 billion. Sales were up 12.8% year over year on an organic basis.
Cost of sales in the quarter rose 13% year over year to $1,598 million. The gross profit was up 2.5% year over year to $585 million. The gross margin contracted to 27% in the fourth quarter from the prior-year quarter’s 29%.
Marketing, general and administrative expenses were $332 million compared with the $302 million incurred in the year-ago quarter. The adjusted operating profit amounted to around $253 million, down 6% from the prior-year quarter’s $269 million. The adjusted operating margin was 11.6% in the quarter compared with the year-ago quarter’s 13.5%.
Segment Highlights
Revenues in the Label and Graphic Materials (LGM) segment increased 2.8% year over year to $1,331 million in the reported quarter. Label and Packaging Materials sales were up low-double digits from prior-year quarter’s levels, with stellar growth witnessed in the high-value product categories and the base business.
Sales increased by low-double digits in the Graphics and Reflective Solutions businesses. On an organic basis, reported sales were up 11%. The segment’s adjusted operating profit declined 17% year on year to $165 million.
Revenues in the Retail Branding and Information Solutions (RBIS) segment grew 29.7% year over year to $659.1 million. On an organic basis, sales were up 20%, reflecting solid growth in both the high-value categories and the base business. The segment’s adjusted operating income was $89 million compared with the year-ago quarter’s $79.6 million.
Net sales in the Industrial and Healthcare Materials (IHM) segment totaled $193 million, up 2% from the $188 million recorded in the prior-year period. The figure marks a mid-single-digit increase in the industrial categories and mid-teens increase in the healthcare categories. The segment reported an adjusted operating income of $18 million compared with the prior-year quarter’s $23.1 million.
Financial Updates
Free cash flow in the reported quarter was $159 million compared with the year-earlier quarter’s $206 million. The company returned $402 million in cash to shareholders through share repurchases and dividend payments in 2021.
Avery Dennison ended 2021 with cash and cash equivalents of $163 million compared with $252 million at the end of 2020. As of the end of 2021, the company’s net debt to adjusted EBITDA ratio was 2.2, below the lower end of the company’s long-term target of 2.3-2.6.
2021 Performance
Avery Dennison reported an adjusted EPS of $8.91 in 2021 compared with $7.10 reported in the prior year. Earnings missed the Zacks Consensus Estimate of $8.94. Including one-time items, the bottom line came in at $8.83, up 34% from $6.61 reported in 2020.
Sales were up 21% year over year to $8.4 billion. The top line came in line with the Zacks Consensus Estimate.
Guidance
Avery Dennison expects adjusted EPS guidance for 2022 in the band of $9.35-$9.75.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -14.94% due to these changes.
VGM Scores
At this time, Avery Dennison has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Avery Dennison has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.