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Avery Dennison (AVY) Up 11.1% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Avery Dennison (AVY - Free Report) . Shares have added about 11.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Avery Dennison due for a pullback? 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 drivers.
Avery Dennison has delivered adjusted earnings of $2.10 per share in third-quarter 2023, beating the Zacks Consensus Estimate of $2.07. The bottom line, however, marked a 15% year-over-year decline.
Including one-time items, the company reported earnings per share (EPS) of $1.71 compared with the year-ago quarter’s $2.70.
Total revenues decreased 9.4% year over year to $2,098 million, and missed the Zacks Consensus Estimate of $2,124 million. Cost of sales in the quarter dropped 10.9% year over year to $1,512.5 million. The gross profit fell 5.4% year over year to $586 million.
Marketing, general and administrative expenses were $332.6 million compared with the $330.8 million incurred in the year-ago quarter. The adjusted operating profit was around $253 million compared with the prior-year quarter’s $228 million. The adjusted operating margin was 12.1% compared with the year-ago quarter’s 12.4%.
Segment Highlights
Revenues in the Materials Group segment declined 14% year over year to $1,456 million in the reported quarter. The reported figure missed our estimate of $1532 million. On an organic basis, sales were down 15.7%. We predicted organic sales to fall 8.8%. The segment’s adjusted operating profit fell 25% year over year to $176.5 million.
Revenues in the Solutions Group were up 3.1% year over year to $642 million. We estimated revenues of $591 million for this segment. On an organic basis, sales improved 0.6% year over year. Our model predicted a fall of 5.7%. The variance was driven by a sequential improvement in Apparel Solutions volume. The segment’s adjusted operating income slumped 33.1% year over year to $50.7 million.
Financial Updates
The company returned $309 million in cash to shareholders through share repurchases and dividend payments in the first nine months of 2023. AVY has also repurchased 0.7 million shares throughout the period.
Avery Dennison ended the third quarter with cash and cash equivalents of $210 million compared with $128 million at the end of the prior-year quarter. The company’s long-term debt increased to $2,598 million from $2,463 million at the end of the prior-year quarter. The company’s net debt to adjusted EBITDA ratio was 2.6.
Guidance
Avery Dennison expects a fourth-quarter 2023 adjusted EPS of $2.10-$2.25.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -10.77% due to these changes.
VGM Scores
At this time, Avery Dennison has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 these revisions 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.
Performance of an Industry Player
Avery Dennison belongs to the Zacks Office Supplies industry. Another stock from the same industry, Xerox Holdings Corporation (XRX - Free Report) , has gained 11.4% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Xerox Holdings Corporation reported revenues of $1.65 billion in the last reported quarter, representing a year-over-year change of -5.7%. EPS of $0.46 for the same period compares with $0.19 a year ago.
For the current quarter, Xerox Holdings Corporation is expected to post earnings of $0.51 per share, indicating a change of -42.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +5.5% over the last 30 days.
Xerox Holdings Corporation has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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Avery Dennison (AVY) Up 11.1% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Avery Dennison (AVY - Free Report) . Shares have added about 11.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Avery Dennison due for a pullback? 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 drivers.
Avery Dennison Q3 Earnings Beat Estimates, Dip Y/Y
Avery Dennison has delivered adjusted earnings of $2.10 per share in third-quarter 2023, beating the Zacks Consensus Estimate of $2.07. The bottom line, however, marked a 15% year-over-year decline.
Including one-time items, the company reported earnings per share (EPS) of $1.71 compared with the year-ago quarter’s $2.70.
Total revenues decreased 9.4% year over year to $2,098 million, and missed the Zacks Consensus Estimate of $2,124 million.
Cost of sales in the quarter dropped 10.9% year over year to $1,512.5 million. The gross profit fell 5.4% year over year to $586 million.
Marketing, general and administrative expenses were $332.6 million compared with the $330.8 million incurred in the year-ago quarter. The adjusted operating profit was around $253 million compared with the prior-year quarter’s $228 million. The adjusted operating margin was 12.1% compared with the year-ago quarter’s 12.4%.
Segment Highlights
Revenues in the Materials Group segment declined 14% year over year to $1,456 million in the reported quarter. The reported figure missed our estimate of $1532 million. On an organic basis, sales were down 15.7%. We predicted organic sales to fall 8.8%. The segment’s adjusted operating profit fell 25% year over year to $176.5 million.
Revenues in the Solutions Group were up 3.1% year over year to $642 million. We estimated revenues of $591 million for this segment. On an organic basis, sales improved 0.6% year over year. Our model predicted a fall of 5.7%. The variance was driven by a sequential improvement in Apparel Solutions volume. The segment’s adjusted operating income slumped 33.1% year over year to $50.7 million.
Financial Updates
The company returned $309 million in cash to shareholders through share repurchases and dividend payments in the first nine months of 2023. AVY has also repurchased 0.7 million shares throughout the period.
Avery Dennison ended the third quarter with cash and cash equivalents of $210 million compared with $128 million at the end of the prior-year quarter. The company’s long-term debt increased to $2,598 million from $2,463 million at the end of the prior-year quarter. The company’s net debt to adjusted EBITDA ratio was 2.6.
Guidance
Avery Dennison expects a fourth-quarter 2023 adjusted EPS of $2.10-$2.25.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -10.77% due to these changes.
VGM Scores
At this time, Avery Dennison has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 these revisions 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.
Performance of an Industry Player
Avery Dennison belongs to the Zacks Office Supplies industry. Another stock from the same industry, Xerox Holdings Corporation (XRX - Free Report) , has gained 11.4% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Xerox Holdings Corporation reported revenues of $1.65 billion in the last reported quarter, representing a year-over-year change of -5.7%. EPS of $0.46 for the same period compares with $0.19 a year ago.
For the current quarter, Xerox Holdings Corporation is expected to post earnings of $0.51 per share, indicating a change of -42.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +5.5% over the last 30 days.
Xerox Holdings Corporation has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.