Why Avery Dennison Shares Popped
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of label manufacturer Avery Dennison (NYS: AVY) climbed 10% today after its quarterly results and guidance topped Wall Street expectations.
So what: Avery Dennison's third-quarter-profit beat was so wide -- adjusted EPS of $0.73 versus the consensus estimate of just $0.45 -- that analysts have no choice but to raise their price targets on the stock. Management cited continued sales momentum at its pressure-sensitive materials segment and rebounding demand in the retail branding business for the market-topping results, giving investors plenty of optimism over strong organic growth going forward.
Now what: Management now sees fiscal 2012 adjusted EPS from continuing operations of $2.00-$2.05, nicely ahead of the average analyst estimate of $1.94. "Our restructuring initiative is well under way, and we are on track to achieve more than $100 million in annualized savings by mid-2013," Chairman and CEO Dean Scarborough said. "The leaner cost structure that will result will enhance our competitive position and strengthen our ability to increase returns." With the stock still sporting a reasonable forward P/E of 13, as well as a juicy 3%-plus dividend yield, buying into that bull talk might not be a bad idea.
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The article Why Avery Dennison Shares Popped originally appeared on Fool.com.Fool contributor Brian Pacampara has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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