Avery Dennison Corporation (NYSE:AVY) looks promising at the moment on improved global markets, operational execution, bookings and backlog strength. We are positive on the company’s prospects and believe this is the right time to add the stock to your portfolio, as it is poised to carry the bullish momentum ahead.
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Avery Dennison Corporation (AVY): Free Stock Analysis Report
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Zacks Investment Research
Let's delve deeper and analyze the factors that make this producer of pressure-sensitive materials an attractive investment option.
What's Working in Favor of Avery Dennison?
Solid Rank, Score: Avery Dennison currently carries a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2, offer the best investment opportunities for investors. Consequently, the company appears to be a compelling investment proposition at the moment.
An Outperformer: Avery Dennison's shares climbed 49.6% in the past year, outperforming the industry's growth of 41.4%.
Strong Q4, Upbeat Guidance: Avery Dennison reported adjusted earnings of $1.33 per share in fourth-quarter 2017, up 34% from 99 cents recorded in the year-ago quarter. Earnings also beat the Zacks Consensus Estimate of $1.25.
For 2018, Avery Dennison guided adjusted earnings per share range of $5.70-$5.95. The company expects to deliver strong top-line and double-digit EPS growth in 2018. The company remains confident about the continued execution of strategies which will help achieve profitable growth and improve returns.
Positive Earnings Surprise History: The company has an impressive record of earnings surprises, surpassing the Zacks Consensus Estimate in the trailing four quarters, delivering an average positive earnings surprise of 6.84%.
Positive Estimate Revisions, Growth Projections: The Zacks Consensus for fiscal 2018 and fiscal 2019 have both gone up 6% over the past 30 days. The Zacks Consensus Estimate for earnings is currently pegged at $5.79 for fiscal 2018 which reflects year-over-year growth of 16%. For fiscal 2019, the Zacks Consensus Estimate for earnings is pegged at $6.31, year-over-year growth of 9%.
Avery Dennison has a long-term expected earnings per share growth of 7%.
Superior Return on Equity (ROE): Avery Dennison’s ROE of 42.3%, as compared with the industry average of 30.0%, manifests the company’s efficiency in utilizing shareholder’s funds.
Growth Drivers in Place: Roughly half of Avery Dennison’s sales are now linked to either any or both of its presence in emerging markets and faster-growing high-value categories such as specialty labels, industrial tapes and Radio-frequency identification (“RFID”). Above-average growth is projected from both over the longer term. Focus on productivity, acquisitions, aggressive cost control and share repurchases will drive the company's results. Moreover, its consistent execution of strategies continues to enhance competitive advantage while driving profitable growth.
The Label and Graphic Materials segment is Avery Dennison’s largest and highest-return business. The segment will maintain strong top-line growth and continued margin expansion, aided by improvement in emerging markets, company’s strategic focus on high-value categories (including specialty labels) and the ongoing contribution from productivity initiatives.
The Industrial and Healthcare Materials segment will benefit from the Yongle, Finesse and Mactac acquisitions. The company is focusing on efforts to drive productivity, while continuing to invest in supporting growth and expects the segment to achieve operating margins at the levels or even higher than the Label and Graphic Materials segment.
Despite a challenging retail environment, the Retail Branding and Information Solutions segment continues to perform well on the back of business-model transformation that has enabled it gain share market share, while driving significant margin expansion as well as continued strength in RFID.
Other Stocks to Consider
Some other top-ranked stocks in the same sector include H&E Equipment Services, Inc. (NASDAQ:HEES) , Caterpillar Inc. (NYSE:CAT) and Komatsu Ltd. (OTC:KMTUY) . While H&E Equipment Services sports a Zacks Rank #1, Astec and Komatsu carry a Zacks Rank #2.
H&E Equipment Services has a long-term earnings growth rate of 18.6%. Its shares have soared 52%, over the past year.
Caterpillar has a long-term earnings growth rate of 10.3%. The company’s shares have rallied 58% in last year.
Komatsu has a long-term earnings growth rate of 27%. The stock has gained 52% in a year’s time.
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Caterpillar Inc. (CAT): Free Stock Analysis Report
Komatsu Ltd. (KMTUY): Free Stock Analysis Report
H&E Equipment Services, Inc. (HEES): Free Stock Analysis Report
Avery Dennison Corporation (AVY): Free Stock Analysis Report
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Zacks Investment Research
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