Avery Dennison Corp.
) hit a new 52-week high of $51.14 on Jan 10, up from its
previous high of $50.88.
The stock closed at $50.88 at the end of trading on Jan 10, with
a solid one-year return of about 44.6% and year-to-date return of
about 1.4%, outperforming the S&P 500. The average volume of
shares traded over the last three months was roughly 773K. This
Pasadena, California-based pressure-sensitive materials producer
has a market cap of $4.9 billion and long-term expected earnings
growth of 14%.
On Oct 25, Avery reported adjusted earnings of 69 cents per share
for 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 action that was initiated last
year. The company has kept the earnings streak alive for the past
four quarters with an average surprise of 5.69%.
Total revenue increased 4% (organic as well as reported basis) to
$1.505 billion from $1.447 billion in the prior-year quarter.
However, revenues missed the Zacks Consensus Estimate of $1.509
billion by a whisker.
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.
Moreover, 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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