As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of Avery Dennison Corporation (NYSE:AVY), it is a financially-sound company with an impressive track record and an optimistic growth outlook. In the following section, I expand a bit more on these key aspects. For those interested in digger a bit deeper into my commentary, read the full report on Avery Dennison here.
Reasonable growth potential with proven track record and pays a dividend
One reason why investors are attracted to AVY is its earnings growth potential in the near future of 20% underlying the notable 41% return on equity over the next few years leading up to 2022. AVY delivered a satisfying double-digit returns of 30% in the most recent year Not surprisingly, AVY outperformed its industry which returned 17%, giving us more conviction of the company’s capacity to drive bottom-line growth going forward.
AVY is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This suggests prudent control over cash and cost by management, which is an important determinant of the company’s health. AVY seems to have put its debt to good use, generating operating cash levels of 0.24x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows.
For Avery Dennison, I’ve compiled three important aspects you should look at:
- Valuation: What is AVY 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 AVY is currently mispriced by the market.
- Dividend Income vs Capital Gains: Does AVY return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from AVY as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of AVY? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.