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Factors Setting the Tone for Avery Dennison (AVY) Q4 Earnings

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Avery Dennison Corporation (AVY - Free Report) is scheduled to report fourth-quarter 2019 results before the opening bell on Jan 29.

Which Way are the Estimates Headed?

The Zacks Consensus Estimate for the December-end quarter’s earnings per share is pegged at $1.68, indicating year-over-year growth of around 10.5%. The Zacks Consensus Estimate for total sales of $1.78 billion represents year-over-year increase of 0.8%.

A Sneak Peak into Q3 Performance

In the last reported quarter, Avery Dennison’s earnings and revenues surpassed the Zacks Consensus Estimate and improved year over year. The company outpaced the Zacks Consensus Estimate in all of the trailing four quarters, the average positive beat being 2.21%.

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 October-December period. Further, Avery Dennison’s pricing actions, restructuring activities and execution of strategies are anticipated to have significantly boosted savings, in turn, bolstering earnings during this period.

The company’s Industrial and Healthcare Materials (IHM) segment continues to drive commercial execution, while also benefiting from the Yongle, Finesse and Mactac acquisitions. The Zacks Consensus Estimate for the segment’s quarterly sales is pinned at $179 million, projecting a year-on-year rise of 2.3%. The segment’s income is estimated to be up 6.5%, year on year, to $19.2 million.

The Zacks Consensus Estimate for the Label and Graphic Materials (LGM) segment’s sales is pinned at $1,192 million for the quarter, calling for year-over-year growth of 0.8%. The segment continues to benefit from growth in emerging markets, focus on high-value categories led by 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 during the December-end 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 during the period under consideration. The Zacks Consensus Estimate for the segment’s income is $158 million, indicating year-over-year growth of 5.3%.

The Zacks Consensus Estimate for the Retail Branding and Information Solutions segment’s fourth-quarter sales is $425 million, suggesting 3.2% improvement from the prior-year quarter's $412 million. The Zacks Consensus Estimate for the segment’s income is pegged at $53 million, suggesting 10.4% 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 0.00%. This is because currently the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at $1.68.

Zacks Rank: Avery Dennison currently carries a Zacks Rank of 3.

Share Price Performance

Avery Dennison’s shares have appreciated 35.7% in the past year compared with the industry’s growth of 40.1%.

Stocks Poised to Beat Earnings Estimates

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

Lindsay Corporation (LNN - Free Report) has an Earnings ESP of +8.07% and sports a Zacks Rank of 1, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dover Corporation (DOV - Free Report) currently carries a Zacks Rank #3 and has an Earnings ESP of +1.72%.

Lincoln Electric Holdings, Inc. (LECO - Free Report) , another Zacks #3 Ranked stock, has an Earnings ESP of +1.01%.

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