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 (NYSE: 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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