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Avery Dennison (AVY) Hits 52-Week High on Solid Q2 Earnings

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Shares of Avery Dennison Corporation (AVY - Free Report) reached a fresh 52-week high of $79.09 on Aug 9, before closing lower at $78.73. This new high was boosted by strong second-quarter 2016 results and an elevated 2016 guidance.

Pasadena, CA-based Avery Dennison, which manufactures pressure-sensitive materials, has a market cap of $7 billion. Average volume of shares traded over the last three months is approximately 728K. Avery Dennison’s shares witnessed a solid one-year return of over 22% and year-to-date return of around 25.6%. The company has beaten the Zacks Consensus Estimate in each of the trailing four quarters, with an average positive surprise of 7.44%.

AVERY DENNISON Price and Consensus

AVERY DENNISON Price and Consensus | AVERY DENNISON Quote

Growth Drivers

Avery Dennison’s shares have been on an uptrend, rising nearly 9% since its posted second-quarter results on Jul 26. Its adjusted earnings and sales – both grew in the reported quarter on a year-over-year basis. Following the robust operating performance in the second quarter, the company raised its adjusted earnings per share guidance to a new range of $3.80–$3.95 for full-year 2016.

Avery Dennison’s results reflected consistent outperformance in its Pressure-sensitive materials (PSM) segment. Its goal in PSM has been to create value by organically improving the top line of this high-return business at 4–5%, while expanding operating margin. The company remains focused in shifting PSM's portfolio mix towards high-value graphic and specialty labels materials.

Avery Dennison expects to benefit over the long term from continuous investment in these areas, including acquisitions, exemplified by the Mactac deal announced in April. The company acquired Mactac for $226 million, including assumed debt on Aug 2. Mactac’s manufacturing facility in Soignies, Belgium, along with sales offices and warehouses in Europe and Asia are now part of Avery Dennison’s global footprint.

Moreover, Avery Dennison will gain from constant focus on productivity and capital discipline. Sustained emphasis on execution of strategies, cost control and share repurchases will also bolster results.

Avery Dennison currently has a Zacks Rank #2 (Buy).

Stocks to Consider

Some better-ranked stocks in the same sector include ACCO Brands Corporation (ACCO - Free Report) , AO Smith Corp. (AOS - Free Report) and Apogee Enterprises, Inc. (APOG - Free Report) . All these stocks carry the same rank as Avery Dennison.

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