On 29 December 2018, Avery Dennison Corporation (NYSE:AVY) released its earnings update. Generally, it seems that analyst forecasts are fairly optimistic, as a 20% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of 9.5%. By 2020, we can expect Avery Dennison’s bottom line to reach US$559m, a jump from the current trailing-twelve-month of US$467m. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Avery Dennison in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
How will Avery Dennison perform in the near future?
Over the next three years, it seems the consensus view of the 10 analysts covering AVY is skewed towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of AVY’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
From the current net income level of US$467m and the final forecast of US$645m by 2022, the annual rate of growth for AVY’s earnings is 10%. EPS reaches $8.02 in the final year of forecast compared to the current $5.35 EPS today. In 2022, AVY’s profit margin will have expanded from 6.5% to 8.2%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Avery Dennison, there are three key factors you should further research:
- 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!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.