Avery Dennison (AVY) Q4 Earnings Miss Estimates, Down Y/Y
Avery Dennison Corporation AVY reported fourth-quarter 2021 adjusted earnings of $2.13 per share, missing the Zacks Consensus Estimate of $2.15. The bottom line declined 6% on a year-over-year basis.
Including one-time items, the company reported earnings per share (EPS) of $2.19 compared with the year-ago quarter’s $2.28 per share.
Total revenues increased 9.7% year over year to $2.18 billion, beating the Zacks Consensus Estimate of $2.14 billion. Sales were up 12.8% year over year on an organic basis.
Cost of sales in the quarter rose 13% year over year to $1,598 million. The gross profit was up 2.5% year over year to $585 million. The gross margin contracted to 27% in the fourth quarter from the prior-year quarter’s 29%.
Marketing, general and administrative expenses were $332 million compared with the $302 million incurred in the year-ago quarter. The adjusted operating profit amounted to around $253 million, down 6% from the prior-year quarter’s $269 million. The adjusted operating margin was 11.6% in the quarter compared with the year-ago quarter’s 13.5%.
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 2.8% year over year to $1,331 million in the reported quarter. Label and Packaging Materials sales were up low-double digits from prior-year quarter’s levels, with stellar growth witnessed in the high-value product categories and the base business.
Sales increased by low-double digits in the Graphics and Reflective Solutions businesses. On an organic basis, reported sales were up 11%. The segment’s adjusted operating profit declined 17% year on year to $165 million.
Revenues in the Retail Branding and Information Solutions (RBIS) segment grew 29.7% year over year to $659.1 million. On an organic basis, sales were up 20%, reflecting solid growth in both the high-value categories and the base business. The segment’s adjusted operating income was $89 million compared with the year-ago quarter’s $79.6 million.
Net sales in the Industrial and Healthcare Materials (IHM) segment totaled $193 million, up 2% from the $188 million recorded in the prior-year period. The figure marks a mid-single-digit increase in the industrial categories and mid-teens increase in the healthcare categories. The segment reported an adjusted operating income of $18 million compared with the prior-year quarter’s $23.1 million.
Financial Updates
Free cash flow in the reported quarter was $159 million compared with the year-earlier quarter’s $206 million. The company returned $402 million in cash to shareholders through share repurchases and dividend payments in 2021.
Avery Dennison ended 2021 with cash and cash equivalents of $163 million compared with $252 million at the end of 2020. As of the end of 2021, the company’s net debt to adjusted EBITDA ratio was 2.2, below the lower end of the company’s long-term target of 2.3-2.6.
2021 Performance
Avery Dennison reported an adjusted EPS of $8.91 in 2021 compared with $7.10 reported in the prior year. Earnings missed the Zacks Consensus Estimate of $8.94. Including one-time items, the bottom line came in at $8.83, up 34% from $6.61 reported in 2020.
Sales were up 21% year over year to $8.4 billion. The top line came in line with the Zacks Consensus Estimate.
Guidance
Avery Dennison expects adjusted EPS guidance for 2022 in the band of $9.35-$9.75.
Price Performance
Shares of Avery Dennison have gained 25.6% in the past year compared with the industry’s growth of 20.7%.
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Zacks Rank and Stocks to Consider
Avery Dennison currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector include Dover Corporation DOV, Silgan Holdings Inc. SLGN and Applied Industrial Technologies, Inc. AIT. All of these stocks sport a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dover’s fourth-quarter 2021 adjusted EPS increased 15% year over year to $1.78, beating the Zacks Consensus Estimate of $1.66. DOV has a trailing four-quarter earnings surprise of 12.3%, on average.
Dover has an estimated earnings growth rate of around 12% for 2022. In the past 60 days, the Zacks Consensus Estimate for current year earnings has been revised upward by 3%. DOV’s shares have rallied around 44.5% in a year.
Silgan Holdings’ fourth-quarter 2021 adjusted EPS increased 32% year over year to a record 79 cents, beating the Zacks Consensus Estimate of 73 cents. SLGN has a trailing four-quarter earnings surprise of 3.8%, on average.
Silgan has a projected earnings growth rate of 13.5% for the current year. The Zacks Consensus Estimate for 2022 earnings has moved north by 3% in the past 60 days. In a year, SLGN has appreciated 19.7% in a year.
Applied Industrial Technologies reported adjusted EPS of $1.46 per share in second-quarter fiscal 2022 (ended Dec 31, 2020), up 49% year on year and beating the Zacks Consensus Estimate of $1.09. AIT has a trailing four-quarter earnings surprise of 27.9%, on average.
Applied Industrial Technologies has an expected earnings growth rate of 14% for 2022. The Zacks Consensus Estimate for current-year earnings has remained unchanged in the past 60 days. AIT’s shares have appreciated 36% in a year.
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