Avery Dennison (NYSE:AVY) Q3 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

Avery Dennison Corporation (NYSE:AVY) is scheduled to report Q3 earnings results on October 21, 2020.

The company is expected to report earnings of $1.50/share on revenue of $1.673 billion. The consensus earnings per share (EPS) of $1.50/share is based on a poll of 13 analysts and represents a decline in eps of −9.6% over the same quarter last year, when the company reported earnings of $1.66/share.

The revenue forecast of $1.673 billion based on a poll of 10 analysts implies a year-over-year (YoY) decline in revenue of −5.0%. Last year the company reported $1.761 billion in revenue for the quarter.

Expected to report EPS contraction of −9.6% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $1,672.92 $1,761.40 −5.0%
EPS $1.50 $1.66 −9.6%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarters.

What are your expectations from Avery Dennison Corporation for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $1.14 $1.27 11.5% Beat
Q1, 2020 $1.50 $1.66 10.6% Beat
Q4, 2019 $1.69 $1.73 2.1% Beat
Q3, 2019 $1.61 $1.66 3.3% Beat
Q2, 2019 $1.68 $1.72 2.4% Beat
Q1, 2019 $1.45 $1.48 1.7% Beat
Q4, 2018 $1.50 $1.52 1.6% Beat
Q3, 2018 $1.47 $1.45 −1.0% Missed

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 27, 2020, the stock price reacted by falling −2.3%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 27, 2020 $120.41 $117.60 −2.3% Decline
April 29, 2020 $114.68 $110.39 −3.7% Decline
January 29, 2020 $129.21 $136.11 5.3% Increase
October 23, 2019 $118.43 $126.20 6.6% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.62, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.62 implies a 0.4% chance of earnings manipulation.

Fundamentals And Technical Analysis

Avery Dennison Corporation is currently trading at $135.52/share, up 1.1% for the day. The company is trading at approximately 95.9% of its 52-week high of $141.09/share. The company’s stock price is up 15.2% since the last earnings report and up 4.8% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 64.71 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:AVY Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 21.73 and a forward P/E multiple of 21.73.

Avery Dennison Corporation’s current share price also implies a price-to-book (P/B) multiple of 9.33. The following table summarizes some other key fundamental ratios:

Data as of October 19, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 27, 2020
Stock Price (Current) $135.52
P/E Ratio 21.7x
P/E Ratio (Fwd) 21.7x
PEG Ratio 0.2
Total Debt / Total Capital 16.9%
Levered Free Cash Flow $488.2 million
EV / EBITDA 14.1x

Finbox

Avery Dennison Corporation is a large-cap stock with a market capitalization of $11.186 billion and a total enterprise value of $13.161 billion. The company operates in the Materials sector and the Containers & Packaging industry.

Avery Dennison Corporation produces and sells pressure-sensitive materials worldwide. The company’s Label and Graphic Materials segment offers pressure-sensitive label and packaging materials; and graphics and reflective products under the Fasson, JAC, Avery Dennison, and Mactac brands, as well as durable cast and reflective films. It provides its products to the home and personal care, beer and beverage, durables, pharmaceutical, wine and spirits, and food market segments; architectural, commercial sign, digital printing, and other related market segments; construction, automotive, and fleet transportation market segments, as well as traffic and safety applications; and sign shops, commercial printers, and designers. The company’s Retail Branding and Information Solutions segment designs, manufactures, and sells brand embellishments, graphic tickets, tags and labels, and sustainable packaging solutions, as well as offers creative services; item-level radio-frequency identification solutions; visibility and loss prevention solutions; price ticketing and marking solutions; care, content, and country of origin compliance solutions; and brand protection and security solutions. It serves retailers, brand owners, apparel manufacturers, distributors, and industrial customers. The company’s Industrial and Healthcare Materials segment offers tapes; pressure-sensitive adhesive based materials and converted products; medical fasteners; and performance polymers under the Fasson, Avery Dennison, and Yongle brands. It serves automotive, electronics, building and construction, general industrial, personal care, and medical markets. The company was formerly known as Avery International Corporation and changed its name to Avery Dennison Corporation in 1990. Avery Dennison Corporation was founded in 1935 and is headquartered in Glendale, California.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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