Shares of Avery Dennison Corp. ( AVY ) 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%.
Growth Drivers
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. ( ACCO ), WD-40 Company ( WDFC ) and Seiko Epson Corp. ( SEKEY ). All these have a Zacks Rank #2 (Buy).
ACCO BRANDS CP (ACCO): Free Stock Analysis Report
AVERY DENNISON (AVY): Free Stock Analysis Report
SEIKO EPSON CP (SEKEY): Get Free Report
WD 40 CO (WDFC): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
