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Avery Dennison (AVY) Earnings and Sales Top Estimates in Q3

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Avery Dennison Corporation (AVY - Free Report) reported adjusted earnings of $1.66 per share in third-quarter 2019, which surpassed the Zacks Consensus Estimate of $1.60. The figure also increased around 14% year over year.

Including one-time items, the company posted net income of $1.71 per share compared with the year-ago quarter’s earnings per share (EPS) of $1.69.

Total revenues inched up nearly 0.1% year over year to $1,761.4 million and beat the Zacks Consensus Estimate of $1,756.3 million. Organic sales growth came in at 2.1% in the reported quarter.

Cost of sales in the quarter declined nearly 0.8% year over year to $1.29 billion. Gross profit rose 2.7% year over year to $471.7 million. Gross margin increased to 26.8% from 26.1% in the prior-year quarter.

Marketing, general and administrative expenses totaled $265.3 million compared with $270.5 million reported in the year-ago quarter. Adjusted operating profit came in at $206.4 million, up from the $188.7 million recorded in the prior-year quarter. Adjusted operating margin rose to 11.7% from the year-earlier quarter’s level of 10.7%.

Avery Dennison Corporation Price, Consensus and EPS Surprise

 

Avery Dennison Corporation Price, Consensus and EPS Surprise

Avery Dennison Corporation price-consensus-eps-surprise-chart | Avery Dennison Corporation Quote

 

Segment Highlights

Revenues in the Label and Graphic Materials segment dipped 0.8% year over year to $1,185.1 million. On an organic basis, sales inched up 1.2%. Adjusted operating profit rose 9.1% year on year to $160.2 million.

Revenues in the Retail Branding and Information Solutions segment rose 2.1% year over year to $406.8 million. On an organic basis, sales were up 4.1% as consistent strength in RFID offset slowdown in base business. The segment’s adjusted operating income increased 3.3% to $46.9 million.

Net sales in the Industrial and Healthcare Materials segment amounted to $169.5 million, increasing 1.4% from the prior-year quarter. On an organic basis, sales were up 3.7%. The segment reported adjusted operating income of $18.6 million compared with $15.3 million in the prior-year quarter.

Financial Updates

Avery Dennison had cash and cash equivalents of $224.2 million at the end of the third quarter, up from $217.6 million at the end of the year-ago quarter. During the first nine months of 2019, the company generated $467 million in cash from operating activities compared with $187.7 million reported in the year-ago quarter.

During the third quarter, Avery Dennison repurchased 0.8 million shares for a total cost of $87.6 million. The company’s share count declined 3.8 million in the quarter.

The company’s long-term debt increased to $1,483.7 million as of Sep 28, 2019 compared with $1,295.3 million as of Sep 29, 2018.

Cost-Reduction Activities

Avery Dennison realized around $18 million in pre-tax savings from restructuring in the third quarter. The company incurred pre-tax restructuring charges of nearly $3 million.

Guidance

For 2019, Avery Dennison revised its adjusted EPS guidance to $6.50-$6.60. Including the impact of the pension-settlement charge, the company tightened EPS guidance to $3.15-$3.25 from the prior estimate of $3.15-$3.30.

Price Performance

Shares of Avery Dennison have rallied 33.1% in the past year compared with the industry’s 22% rise.



Zacks Rank and Stocks to Consider

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

Some better-ranked stocks in the Industrial Products sector are Plug Power, Inc (PLUG - Free Report) , Cimpress N.V (CMPR - Free Report) and Cintas Corporation (CTAS - Free Report) . While Plug Power and Cimpress sport a Zacks rank #1 (Strong Buy), Cintas carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here

Plug Power has an estimated earnings growth rate of 2.8% for 2019. The company’s shares have gained 133.9% in the past year.

Cimpress has an expected earnings growth rate of 5% for the current fiscal. The stock has appreciated 26.6% in a year’s time.

Cintas has an estimated earnings growth rate of 12.74% for 2019. Shares of the company have surged 58.5% in the past year.

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