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On 29 December 2018, Avery Dennison Corporation (NYSE:AVY) announced its earnings update. Overall, the consensus outlook from analysts appear fairly confident, with earnings expected to grow by 19% in the upcoming year against the past 5-year average growth rate of 9.5%. Currently with trailing-twelve-month earnings of US$467m, we can expect this to reach US$558m by 2020. Below is a brief commentary around Avery Dennison’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Can we expect Avery Dennison to keep growing?
Over the next three years, it seems the consensus view of the 10 analysts covering AVY is skewed towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
From the current net income level of US$467m and the final forecast of US$613m by 2022, the annual rate of growth for AVY’s earnings is 10.0%. EPS reaches $7.63 in the final year of forecast compared to the current $5.28 EPS today. Margins are currently sitting at 6.5%, which is expected to expand to 7.7% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Avery Dennison, I’ve put together three essential factors you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Avery Dennison worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Avery Dennison is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Avery Dennison? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.