Avery Dennison (AVY) Q2 Earnings Miss, Revenues Dip Y/Y
Avery Dennison Corporation AVY has delivered adjusted earnings of $1.92 per share, missing the Zacks Consensus Estimate of $2.01 in second-quarter 2023. The bottom line marked a 27% year-over-year decline.
Including one-time items, the company has reported earnings per share (EPS) of $1.24 compared with the year-ago quarter’s $2.61.
Total revenues fell 10.9% year over year to $2,091 million, missing the Zacks Consensus Estimate of $2,163 million.
Cost of sales in the quarter fell 9.8% year over year to $1,537 million. The gross profit declined 13.9% year over year to $553 million.
Marketing, general and administrative expenses were $320 million compared with the $333 million incurred in the year-ago quarter. The adjusted operating profit amounted to around $234 million compared with the prior-year quarter’s $311 million. The adjusted operating margin was 11.2% in the quarter compared with the year-ago quarter’s 13.2%.
Avery Dennison Corporation Price, Consensus and EPS Surprise
Avery Dennison Corporation price-consensus-eps-surprise-chart | Avery Dennison Corporation Quote
Segmental Highlights
Revenues in the Materials Group segment declined 12.6% year over year to $1,476 million in the reported quarter. The reported figure missed our estimate of $1523 million. On an organic basis, sales were down 10.5%. We predicted organic sales to fall 7.3%. The segment’s adjusted operating profit fell 19.2% year over year to $200 million.
Revenues in the Solutions Group were down 6.5% year over year to $615 million. We estimated revenues of $641 million for this segment. On an organic basis, sales declined 8.1%. Our model predicted a fall of 3.2%. The segment’s adjusted operating income slumped 36% year over year to $55 million.
Financial Updates
The company returned $216 million in cash to shareholders through share repurchases and dividend payments in the first half of 2023 and invested $194 million in acquisitions. AVY repurchased 0.5 million shares throughout the quarter.
Avery Dennison ended the quarter with cash and cash equivalents of $217 million compared with $165 million at the end of the prior-year quarter. The company’s long-term debt was $2,910 million at the end of the quarter under review, up from $2,493 million at the end of the second quarter of 2023.
Guidance
Avery Dennison expects third-quarter 2023 adjusted EPS of $2.00-$2.20.
Price Performance
AVY shares have gained 1.6% in the past year compared with the industry’s growth of 0.4%.
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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 Worthington Industries, Inc. WOR, The Manitowoc Company, Inc. MTW and W.W. Grainger, Inc. GWW. WOR and MTW sport a Zacks Rank #1 (Strong Buy) at present, and GWW has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Worthington Industries has an average trailing four-quarter earnings surprise of 14.9%. The Zacks Consensus Estimate for WOR’s fiscal 2023 earnings is pegged at $5.65 per share. The consensus estimate for 2023 earnings has moved north by 22.6% in the past 60 days. Its shares gained 55% in the last year.
Manitowoc has an average trailing four-quarter earnings surprise of 256.3%. The Zacks Consensus Estimate for MTW’s 2023 earnings is pegged at $1.12 per share. The consensus estimate for 2023 earnings has moved 7.8% north in the past 60 days. MTW’s shares gained 68.8% in the last year.
The Zacks Consensus Estimate for Grainger’s 2023 earnings per share is pegged at $35.86, up 1% in the past 60 days. It has a trailing four-quarter average earnings surprise of 9.1%. GWW gained 59.5% in the last year.
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