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What's in the Offing for Avery Dennison's (AVY) Q3 Earnings?

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Avery Dennison Corporation (AVY - Free Report) is scheduled to report third-quarter 2019 financial numbers before the opening bell on Oct 23.

Which Way are the Estimates Headed?

The Zacks Consensus Estimate for the September-end quarter’s earnings per share is pegged at $1.60, indicating year-over-year growth of around 10.3%. The Zacks Consensus Estimate for total sales of $1.75 billion represents year-over-year decline of 0.2%.
 
A Sneak Peak into Q2 Performance

In the last reported quarter, Avery Dennison’s earnings surpassed the Zacks Consensus Estimate and improved year over year. However, the bottom-line figure missed the consensus mark and declined year on year. The company surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average positive surprise being 1.10%.

Let’s see how things are shaping up prior to this announcement.

Factors to Consider

The company is likely to have benefited from acquisitions, organic growth and strong demand in emerging markets during the July-September quarter. Further, Avery Dennison’s pricing actions, restructuring activities and execution of strategies will likely have significantly boosted savings and thus, bolstered earnings during this period.

While the company’s Industrial and Healthcare Materials (IHM) segment continues to benefit from the Yongle, Finesse and Mactac acquisitions, a lackluster China automotive market might have thwarted the segment’s top-line growth in the third quarter. The Zacks Consensus Estimate for the segment’s quarterly sales is pinned at $168 million, projecting a year-on-year decline of 0.6%. The segment’s income is expected to be up 10.8% year on year to $16.9 million.

The Zacks Consensus Estimate for the Label and Graphic Materials (LGM) segment’s sales is pinned at $1,179 million for the quarter, calling for an expected year-over-year decline of 1.2%. The segment continues to benefit from growth in emerging markets, focus on high-value categories (including specialty labels), as well as contributions from productivity initiatives. These factors are anticipated to have been conducive to the company’s top-line growth and margins in the July-September quarter. Furthermore, Avery Dennison’s completion of restructuring actions associated with the consolidation of the European footprint of its LGM segment are likely to have driven higher returns for the segment in the quarter. The Zacks Consensus Estimate for the segment’s income is $158 million, indicating year-over-year growth of 3.2%.

The Zacks Consensus Estimate for the Retail Branding and Information Solutions segment’s third-quarter sales is $413 million, suggesting 3.7% improvement from the prior-year quarter's $398 million. The Zacks Consensus Estimate for the segment’s income is pegged at $49.8 million, suggesting 17.5% year-over-year growth. This apart, Avery Dennison is likely to have benefited from its faster-growing high-value product categories, such as specialty labels and Radio-frequency identification (RFID).

Avery Dennison Corporation Price and EPS Surprise

Earnings Whispers

Our proven model doesn’t conclusively predict an earnings beat for Avery Dennison this season. 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’s 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: The Earnings ESP for Avery Dennison is -0.63%. This is because currently the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.59 and $1.60, respectively.

Zacks Rank: Avery Dennison currently carries a Zacks Rank of 4 (Sell).

Share Price Performance

Avery Dennison’s shares have appreciated 20.6% in the past year, outperforming the industry’s growth of 17.3%.



Stocks to Consider

Here are few Industrial Products stocks which you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

John Bean Technologies Corporation (JBT - Free Report) has an Earnings ESP of +0.55% and currently carries a Zacks Rank of 3.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Northwest Pipe Company (NWPX - Free Report) , a Zacks #3 Ranked stock, has an Earnings ESP of +19.23%.

Sealed Air Corporation (SEE - Free Report) has an Earnings ESP of +2.40% and holds a Zacks Rank of 3, at present.

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