Avery Dennison Corporation
) reached a new 52-week high of $45.02 on July 8, surpassing the
previous high of $44.92. The new high is based on the expected
benefits from its restructuring initiatives and divestiture of
The Pasadena, CA-based pressure-sensitive materials producer,
which has a market cap of roughly $4.47 billion, has delivered a
robust one-year return of about 69.2% and year-to-date return of
about 30.4%, outperforming the S&P 500. The company's
long-term estimated earnings per share growth rate is 14.4%.
Average volume of shares traded over the last three months is
Avery has divested both its Office and Consumer Products (OCP)
and Designed and Engineered Solutions (DES) units. The segments
have been struggling for a long time. With the divestiture, Avery
is now able to focus on its market-leading, pressure sensitive
materials business and Retail Branding and Information Solutions
segment. This will also help it in attaining financial targets of
double-digit earnings growth and higher returns.
Avery has aggressively implemented a restructuring program to
reduce costs across all business segments. The program is
anticipated to be completed by mid 2013. Avery expects to save
more than $100 million annually by leveraging this program by mid
Avery's adjusted earnings increased 37% year over year to 59
cents per share in first-quarter 2013 and revenues rose 4% year
over year to $1.5 billion. Avery also hiked its quarterly
dividend by 7%, from 27 cents per share to 29 cents per share.
Avery remains committed to its long-term targets of sales growth
in the range of 3% to 5% and net income growth of 10-15% by 2015.
Earnings growth of 15-20% is expected to be achieved through
continued development in emerging markets and productivity
In addition, the company expects to generate free cash flow of
around $1.2 billion to $1.4 billion over the 2012-2015 timeframe
or $1.6 billion to $1.8 billion (including $400 million from the
abovementioned sale). Of this, $150 million to $300 million will
be used to repay debt, more than $200 million will be invested in
acquisitions and $1 billion to $1.5 billion will be returned to
shareholders over the period in combined share buyback and
Avery currently retains a Zacks Rank #2 (Buy).
Other Stocks to Consider
Other stocks in the same industry with favorable Zacks Rank are
Energizer Holdings Inc.
CompX International Inc.
Herman Miller Inc.
). While Energizer Holdings holds a Zacks Rank #1
(Strong Buy), CompX International and Herman Miller carry a Zacks
Rank #2 (Buy).
AVERY DENNISON (AVY): Free Stock Analysis
COMPX INTL INC (CIX): Free Stock Analysis
ENERGIZER HLDGS (ENR): Free Stock Analysis
HERMAN MILLER (MLHR): Free Stock Analysis
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