Yahoo Finance Why Is Avery Dennison (AVY) Up 4.6% Since Last Earnings Report?
A month has gone by since the last earnings report for Avery Dennison (AVY). Shares have added about 4.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Avery Dennison due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Avery Dennison Q1 Earnings Beat, Revenues Rise Y/Y
Avery Dennison has delivered adjusted earnings of $2.29 per share in first-quarter 2024, surpassing the Zacks Consensus Estimate of $2.15. The bottom line marked a 35% year-over-year improvement, driven by higher volume and productivity gains.
Including one-time items, the company reported earnings per share (EPS) of $2.13 compared with the year-ago quarter’s $1.49 per share.
Total revenues increased 4.2% year over year to $2.15 billion, surpassing the Zacks Consensus Estimate of $2.14 billion.
The cost of sales in the quarter dipped 0.2% year over year to $1.52 billion. The gross profit improved 16.6% year over year to $632 million.
Marketing, general and administrative expenses were $365 million compared with the $334 million incurred in the year-ago quarter. The adjusted operating profit was around $274 million compared with the prior-year quarter’s $208 million. The adjusted operating margin was 12.7%, a 260-basis-point expansion from 10.1% in the year-ago quarter.
Segmental Highlights
Revenues in the Materials Group segment increased 2.5% year over year to $1.5 billion in the reported quarter. The reported figure surpassed our estimate of $1.48 billion. On an organic basis, sales moved up 1.9%. We predicted organic sales to rise 1.7%. The segment’s adjusted operating profit rose 37.6% year over year to $241 million.
Revenues in the Solutions Group rose 8.3% year over year to $655 million. We estimated revenues of $661 million for this segment. On an organic basis, sales improved 5.8%. Our model predicted a rise of 7.6%. The segment’s adjusted operating income increased 10.5% year over year to $61 million.
Financial Updates
The company returned $81 million in cash to shareholders through share repurchases and dividend payments in the first quarter of 2024. AVY repurchased 0.1 million shares throughout the quarter.
Avery Dennison ended the quarter with cash and cash equivalents of $186 million compared with $351 million at the end of the prior-year comparable quarter. The company’s long-term debt was $2.07 billion at the end of the quarter under review, down from $2.91 billion at the end of the first quarter of 2023. The company’s net debt to adjusted EBITDA ratio was 2.3.
AVY realized approximately $19 million in pre-tax savings from restructuring (net of transition costs) in the quarter. The company also incurred pre-tax restructuring charges of around $6 million.
Guidance for 2024
Avery Dennison continues to expect adjusted EPS between $9.00 and $9.50 for 2024.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
Currently, Avery Dennison has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Avery Dennison has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Avery Dennison Corporation (AVY) : Free Stock Analysis Report
