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Why ACCO Brands Stock Jumped 20% Today

By Joe Tenebruso – Jul 31, 2019 at 8:08PM

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The school and office supplies maker's Q2 earnings bested Wall Street's expectations.

What happened

Shares of ACCO Brands (ACCO -1.80%) popped more than 20% on Wednesday, following the release of the company's second-quarter financial results. 

So what

The owner of brands such as Five Star and Mead delivered record sales of $518.7 million, representing year-over-year growth of 4% and 6.8% when excluding the impact of foreign currency movements.

Better still, ACCO Brands' operating income jumped 18.5% to $61.4 million, while net income surged 39.7% to $35.9 million. All told, the company's earnings per share came in at $0.35, which was above analysts' estimates for EPS of $0.32. 

"We have managed the business well, and offset inflation and tariffs with pricing and tight expense management," CEO Boris Elisman said in a press release.

A person pointing to an upwardly sloping line chart that's above a flat line chart

ACCO Brands' stock rose sharply on a down day for the market. Image source: Getty Images.

Now what

These results prompted ACCO Brands to raise its full-year sales and profit guidance. The company now expects net sales to be flat year over year, up from a prior forecast of flat to down 3%. Adjusted earnings per share, meanwhile, are projected to be between $1.15 and $1.20, up from $1.10 to $1.20. Management also reiterated its free cash flow target of $165 million to $175 million.

"Our strategy of diversifying into growing channels and geographies is working, and our focus on consumer-centric products and brands is paying off as evidenced by the strong sales and profit growth in North America where we are well-positioned for a very good back-to-school season," Elisman said.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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