Unveiling Avery Dennison Corp's Market Potential: A Comprehensive GF Score Analysis
Avery Dennison Corp (NYSE:AVY) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $180.93, Avery Dennison Corp has witnessed a surge of 2.44% over a period, marked against a three-month change of 7.37%. A thorough analysis, underlined by the GuruFocus Score Rating, suggests that Avery Dennison Corp is well-positioned for substantial growth in the near future.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Here are the key components of Avery Dennison Corp's GF Score:
1. Financial strength rank: 5/10
2. Profitability rank: 9/10
3. Growth rank: 10/10
4. GF Value rank: 5/10
5. Momentum rank: 7/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With a high profitability rank and an impressive growth rank, GuruFocus assigned Avery Dennison Corp the GF Score of 92 out of 100, which signals the highest outperformance potential.
Understanding Avery Dennison Corp's Business
Avery Dennison Corp, with a market cap of $14.58 billion, is a leading manufacturer of pressure-sensitive materials, merchandise tags, and labels. The company also runs a specialty converting business that produces radio-frequency identification inlays and labels. Avery Dennison draws a significant amount of revenue from outside the United States, with international operations accounting for the majority of total sales. The company's sales stand at $8.5 billion with an operating margin of 10.8%.
Profitability Rank Breakdown
The Profitability Rank shows Avery Dennison Corp's impressive standing among its peers in generating profit. Avery Dennison Corp's Operating Margin has increased (7.88%) over the past five years, as shown by the following data: 2018: 11.01; 2019: 11.65; 2020: 12.38; 2021: 12.66; 2022: 11.88. Avery Dennison Corp's strong Predictability Rank of 4.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Avery Dennison Corp demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 9.8%, which outperforms better than 62.22% of 352 companies in the Packaging & Containers industry. Moreover, Avery Dennison Corp has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 41.2, and the rate over the past five years is 16.5. This trend accentuates the company's continued capability to drive growth.
Conclusion
Given Avery Dennison Corp's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential outperformance. This analysis underscores the company's robust financial health and its potential to deliver substantial returns to investors. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article first appeared on GuruFocus.
