Avery Dennison Corp.
) hit a new 52-week high of $51.27 on Jan 14, surpassing its
previous high of $51.14 attained on Jan 10. This Pasadena,
Calif.-based pressure-sensitive materials producer has a market
cap of $4.9 billion and long-term expected earnings growth of
Avery Dennison has had a solid run in the past 52 weeks, ranging
from a 52-week low of $35.56 touched on Jan 22, 2013 to the
52-week high reached on Jan 14. The stock has delivered a solid
one-year return of about 46.7% and year-to-date return of about
2.1%, outperforming the S&P 500. The average volume of shares
traded over the last three months was roughly 773K.
Avery Dennison's share price showed an upward trend as the
company announced improved third quarter earnings on Oct 25.
Avery reported adjusted earnings of 69 cents per share in the
third quarter of 2013, up 35% year over year and ahead of the
Zacks Consensus Estimate of 65 cents. Results benefited from
revenue growth in the core segments and the company's
restructuring and productivity actions. The company has kept the
earnings streak alive for the past four quarters with an average
surprise of 5.69%.
For 2013, Avery raised its adjusted earnings forecast to the
range of $2.60 to $2.70 per share from the previous projection of
$2.40 to $2.60. The revised guidance reflects annual growth of
33% to 38%.
Avery has aggressively implemented a restructuring program to
reduce costs across all business segments. The company remains
committed to its long-term targets (by 2015) of sales growth in
the range of 3%-5% and net income growth of 10%-15%. Earnings per
share growth of 15%-20% are expected from continued expansion in
emerging markets as well as productivity improvements.
In addition, the company is implementing a new operating model,
which comprises a few large sites with a broad range of
production capabilities. At the same time, Avery has increased
its digital printing capacity, thereby enabling the production of
smaller quantities at a greater frequency and reduced lead time,
which is more attuned to customer needs.
To sum up, modest top-line growth, ongoing productivity
improvements and highly disciplined capital management will drive
double-digit earnings growth and solid free cash flow that will
maximize shareholder returns.
Currently, Avery carries a Zacks Rank #4 (Sell).
Other Stocks to Consider
Some better-ranked stocks in the same industry include
ACCO Brands Corp
Seiko Epson Corp.
). All these have a Zacks Rank #2 (Buy).
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AVERY DENNISON (AVY): Free Stock Analysis
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