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Here's Why You Should Hold on to Avery Dennison (AVY) Stock Now
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Avery Dennison Corporation (AVY - Free Report) has been gaining from restructuring activities and a disciplined capital-allocation strategy, which is impressive amid elevated input costs and supply chain issues.
Its focus on expanding in high-value product categories and improving profitability in its base business is also aiding the company’s growth.
Let’s delve deeper and analyze the factors that make this Zacks Rank #3 (Hold) stock worth holding on to at present.
Price Performance: Shares of the company have gained 8% in the past year compared with the industry’s growth of 6.1%.
Image Source: Zacks Investment Research
Solid Demand & Volume Growth: Around 40% of the company’s revenues stem from the labeling of non-durable consumer goods like food, beverage, home and personal care products. The demand for these products has been strong.
In the long term, growing demand from emerging markets on the back of the rising middle class and the consequent surge in demand for packaged goods and shift in labeling technology to pressure-sensitive materials will drive growth for the company.
Also, around 15% of the company’s revenues are tied to logistics and shipping, which will be sustained by growth in e-commerce activities.
Upbeat Segmental Performance: Strong demand for consumer-packaged goods and e-commerce trends continue to drive the Materials Group segment (72% of the company’s sales ). The segment is well-poised for profitable growth, driven by solid top-line growth and continued margin expansion, as well as volume improvement.
The segment also gains from growth in base business and high-value categories led by specialty labels, as well as contributions from productivity initiatives and pricing actions.
Avery Dennison’s Solutions Group segment continues to benefit from solid margin expansions, driven by strength in high-value categories and the base business.
The segment is witnessing strong volume growth in Intelligent Labels, RFID and the core apparel label business, with particular strength and performance in premium channels as well as continued double-digit growth in external embellishments. Its Intelligent Labels business is gaining from strong apparel.
Backed by these tailwinds, it expects adjusted EPS for 2023 in the band of $8.85-$9.20.
Impressive Strategic Initiatives: Avery Dennison focuses on five overarching priorities — driving outsized growth in high-value product categories, growing profitability in base businesses, relentlessly pursuing productivity improvement, a disciplined capital-management approach and leading with environmentally and socially responsible practices and solutions.
It is executing long-term strategic restructuring initiatives to enhance the company’s competitive position in the base business, freeing up resources to invest in high-value categories while supporting margins.
Focus on Financial Goals: After successfully achieving long-term financial growth goals in 2021, announced in 2017, the company is progressing toward its 2025 goals.
In the past five years, Avery Dennison delivered an EPS CAGR of 17% and revenues grew to $8.4 billion. Its Intelligent Labels business tripled in size over the last five years, growing 20% annually on an organic basis, stemming from a robust apparel business.
Along with strategic restructuring efforts to position the company for long-term growth, Avery Dennison has undertaken several pricing and re-engineering actions to mitigate inflationary cost pressure.
Near-Term Concerns
The company is bearing the brunt of input cost inflation. Strong demand and supply constraints continue to push up raw material, labor and freight costs. These factors are expected to dent the company’s margins.
Avery Dennison has also been dealing with supply-chain challenges, which are likely to continue impacting its results. Currency translation is also likely to hurt its top-line growth.
In the first quarter of 2023, apparel inventory reductions were widespread across all segments, which led to a decline in volumes. The company anticipates destocking to continue in the Materials Group segment in the coming quarters as retailers factor in high inventories, muted holiday performance and lower sentiment into their short-term sourcing plans.
Worthington Industries has an average trailing four-quarter earnings surprise of 14.9%. The Zacks Consensus Estimate for WOR’s fiscal 2023 earnings is pegged at $5.65 per share. The consensus estimate for 2023 earnings has moved north by 22.6% in the past 60 days. Its shares gained 57.9% in the last year.
Manitowoc has an average trailing four-quarter earnings surprise of 256.3%. The Zacks Consensus Estimate for MTW’s 2023 earnings is pegged at $1.12 per share. The consensus estimate for 2023 earnings has moved 7.8% north in the past 60 days. MTW’s shares gained 88.3% in the last year.
The Zacks Consensus Estimate for Grainger’s 2023 earnings per share is pegged at $35.86, up 1% in the past 60 days. It has a trailing four-quarter average earnings surprise of 9.1%. GWW gained 68.4% in the last year.
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Here's Why You Should Hold on to Avery Dennison (AVY) Stock Now
Avery Dennison Corporation (AVY - Free Report) has been gaining from restructuring activities and a disciplined capital-allocation strategy, which is impressive amid elevated input costs and supply chain issues.
Its focus on expanding in high-value product categories and improving profitability in its base business is also aiding the company’s growth.
Let’s delve deeper and analyze the factors that make this Zacks Rank #3 (Hold) stock worth holding on to at present.
Price Performance: Shares of the company have gained 8% in the past year compared with the industry’s growth of 6.1%.
Image Source: Zacks Investment Research
Solid Demand & Volume Growth: Around 40% of the company’s revenues stem from the labeling of non-durable consumer goods like food, beverage, home and personal care products. The demand for these products has been strong.
In the long term, growing demand from emerging markets on the back of the rising middle class and the consequent surge in demand for packaged goods and shift in labeling technology to pressure-sensitive materials will drive growth for the company.
Also, around 15% of the company’s revenues are tied to logistics and shipping, which will be sustained by growth in e-commerce activities.
Upbeat Segmental Performance: Strong demand for consumer-packaged goods and e-commerce trends continue to drive the Materials Group segment (72% of the company’s sales ). The segment is well-poised for profitable growth, driven by solid top-line growth and continued margin expansion, as well as volume improvement.
The segment also gains from growth in base business and high-value categories led by specialty labels, as well as contributions from productivity initiatives and pricing actions.
Avery Dennison’s Solutions Group segment continues to benefit from solid margin expansions, driven by strength in high-value categories and the base business.
The segment is witnessing strong volume growth in Intelligent Labels, RFID and the core apparel label business, with particular strength and performance in premium channels as well as continued double-digit growth in external embellishments. Its Intelligent Labels business is gaining from strong apparel.
Backed by these tailwinds, it expects adjusted EPS for 2023 in the band of $8.85-$9.20.
Impressive Strategic Initiatives: Avery Dennison focuses on five overarching priorities — driving outsized growth in high-value product categories, growing profitability in base businesses, relentlessly pursuing productivity improvement, a disciplined capital-management approach and leading with environmentally and socially responsible practices and solutions.
It is executing long-term strategic restructuring initiatives to enhance the company’s competitive position in the base business, freeing up resources to invest in high-value categories while supporting margins.
Focus on Financial Goals: After successfully achieving long-term financial growth goals in 2021, announced in 2017, the company is progressing toward its 2025 goals.
In the past five years, Avery Dennison delivered an EPS CAGR of 17% and revenues grew to $8.4 billion. Its Intelligent Labels business tripled in size over the last five years, growing 20% annually on an organic basis, stemming from a robust apparel business.
Along with strategic restructuring efforts to position the company for long-term growth, Avery Dennison has undertaken several pricing and re-engineering actions to mitigate inflationary cost pressure.
Near-Term Concerns
The company is bearing the brunt of input cost inflation. Strong demand and supply constraints continue to push up raw material, labor and freight costs. These factors are expected to dent the company’s margins.
Avery Dennison has also been dealing with supply-chain challenges, which are likely to continue impacting its results. Currency translation is also likely to hurt its top-line growth.
In the first quarter of 2023, apparel inventory reductions were widespread across all segments, which led to a decline in volumes. The company anticipates destocking to continue in the Materials Group segment in the coming quarters as retailers factor in high inventories, muted holiday performance and lower sentiment into their short-term sourcing plans.
Stocks to Consider
Some better-ranked stocks from the Industrial Products sector are Worthington Industries, Inc. (WOR - Free Report) , The Manitowoc Company, Inc. (MTW - Free Report) , and W.W. Grainger, Inc. (GWW - Free Report) . WOR and MTW each sport a Zacks Rank #1 (Strong Buy) at present and GWW has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Worthington Industries has an average trailing four-quarter earnings surprise of 14.9%. The Zacks Consensus Estimate for WOR’s fiscal 2023 earnings is pegged at $5.65 per share. The consensus estimate for 2023 earnings has moved north by 22.6% in the past 60 days. Its shares gained 57.9% in the last year.
Manitowoc has an average trailing four-quarter earnings surprise of 256.3%. The Zacks Consensus Estimate for MTW’s 2023 earnings is pegged at $1.12 per share. The consensus estimate for 2023 earnings has moved 7.8% north in the past 60 days. MTW’s shares gained 88.3% in the last year.
The Zacks Consensus Estimate for Grainger’s 2023 earnings per share is pegged at $35.86, up 1% in the past 60 days. It has a trailing four-quarter average earnings surprise of 9.1%. GWW gained 68.4% in the last year.