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Avery Dennison (AVY) Tops Q2 Earnings Estimates, Ups '22 View

Avery Dennison Corporation AVY delivered adjusted earnings of $2.64 per share, beating the Zacks Consensus Estimate of $2.39 in second-quarter 2022. The bottom line marked a 17% improvement year over year.

Including one-time items, the company reported earnings per share (EPS) of $2.61 compared with the year-ago quarter’s $2.19 per share.

Total revenues increased 11.7% year over year to $2,347 million, beating the Zacks Consensus Estimate of $2,328 million.

Cost of sales in the quarter rose 11.7% year over year to $1,703.5 million. The gross profit rose 11.7% year over year to $643.5 million.

Marketing, general and administrative expenses were $332.7 million compared with the $307 million incurred in the year-ago quarter. The adjusted operating profit amounted to around $310.8 million compared with the prior-year quarter’s $269.3 million. The adjusted operating margin was 13.2% in the quarter compared with the year-ago quarter’s 12.8%.

Avery Dennison Corporation Price, Consensus and EPS Surprise

 

Avery Dennison Corporation Price, Consensus and EPS Surprise
Avery Dennison Corporation Price, Consensus and EPS Surprise

Avery Dennison Corporation price-consensus-eps-surprise-chart | Avery Dennison Corporation Quote

 

Segment Highlights

Revenues in the Label and Graphic Materials (LGM) segment increased 8.4% year over year to $1,491.8 million in the reported quarter. On an organic basis, reported sales were up 14.5%. Label and Packaging Materials sales were up high teens on an organic basis with strong growth in high-value product categories and the base business. Sales decreased by mid-single digits organically in the combined Graphics and Reflective Solutions businesses. The segment’s adjusted operating profit increased 14% year on year to $226.3 million.

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Revenues in the Retail Branding and Information Solutions (RBIS) segment rose 24.2% year over year to $657.5 million. On an organic basis, sales were up 4.5%, reflecting solid growth in the high-value product categories. The segment’s adjusted operating income was $85.9 million compared with the year-ago quarter’s $69.61 million.

Net sales in the Industrial and Healthcare Materials (IHM) segment totaled $197.7 million, up 0.6% from $196.5 million recorded in the prior-year quarter. The improvement was driven by a mid-single digit increase in industrial categories and a high teens increase in healthcare categories. The segment reported an adjusted operating income of $20.45 million compared with the prior-year quarter’s $23 million.

Financial Updates

The company returned $386 million in cash to shareholders through share repurchases and dividend payments in the first half of 2022.

Avery Dennison ended the second quarter with cash and cash equivalents of $164.8 million compared with $344.8 million at the end of the prior-year quarter. The company’s long term debt increased to $2,493.4 million from $2,020.2 million in the prior-year quarter. The company’s net debt to adjusted EBITDA ratio was 2.2.

Guidance

Avery Dennison now expects adjusted EPS guidance for 2022 in the band of $9.70-$10.00, up from the prior guidance of $9.45-$9.85.

Price Performance

Shares of Avery Dennison have declined 18.2% in the past year compared with the industry’s fall of 16.1%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

 

Zacks Rank and Stocks to Consider

Avery Dennison currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the Industrial Products sector are Greif Inc. GEF, Titan International TWI and Valmont Industries VMI. While GEF and TWI sport a Zacks Rank #1 (Strong Buy), VMI carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Greif has an estimated earnings growth rate of 37% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 17%.

Greif pulled off a trailing four-quarter earnings surprise of 22.9%, on average. GEF’s shares have risen 12.6% in the past year.

Titan International has an estimated earnings growth rate of 165% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 43%.

Titan International pulled off a trailing four-quarter earnings surprise of 56.4%, on average. TWI’s shares have surged 102.7% in a year.

Valmont Industries has an expected earnings growth rate of around 27% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 4% in the past 60 days.

Valmont Industries has a trailing four-quarter earnings surprise of 13.7%, on average. VMI’s shares have gained 10% in the past year.


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