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Moody’s Rated Avery Dennison’s Commercial Paper Program to P-2

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Price movement of Avery Dennison

Avery Dennison (AVY) has a market cap of $6.2 billion. AVY fell by 0.32% to close at $69.01 per share as of March 15, 2016. The price movement on a weekly, monthly, and year-to-date (or YTD) basis is 1.2%, 8.5%, and 10.8%, respectively.

Currently, AVY is trading 3.7% above its 20-day moving average, 9.8% above its 50-day moving average, and 12.4% above its 200-day moving average.

The Vanguard Materials ETF (VAW) invests 0.79% of its holdings in Avery Dennison. The ETF tracks a very broad market-cap-weighted index of the US materials companies. The YTD price movement of VAW was 1.6% as of March 14, 2016.

The Vanguard Mid-Cap Value ETF (VOE) invests 0.33% of its holdings in Avery Dennison. The ETF tracks the CRSP US Mid-Cap Value Index, which classifies value stocks based on five value factors.

The market caps of Avery Dennison’s competitors are as follows:

  • 3M Company (MMM) — $98.3 billion
  • Bemis Company (BMS) — $5.0 billion
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Moody’s rated ADTM commercial paper program

Moody’s Investors Service assigned a Prime-2 rating to Avery Dennison Treasury Management B.V. (or ADTM), a wholly owned subsidiary of Avery Dennison’s (Baa2, P-2, stable) new $500 million global commercial paper program. It also affirmed Avery’s existing Baa2 and P-2 ratings.

ADTM’s new $500 million commercial paper program will be used for general corporate purposes and is supported by Avery’s $700 million multi-jurisdictional revolving credit facility due October 3, 2019. The outlook for all the ratings is stable.

Performance of Avery Dennison in 4Q15 and 2015

Avery Dennison reported fiscal 4Q15 net sales of $1,454.8 million, a fall of 9.3% compared to net sales of $1,604.8 million in fiscal 4Q14. Its net income and EPS (earnings per share) fell to $57.0 million and $0.62, respectively, in fiscal 4Q15, compared to $70.6 million and $0.76, respectively, in fiscal 4Q14.

The company repurchased 1.9 million shares in fiscal 4Q15 at an aggregate cost of $124 million.

Fiscal 2015 results

In fiscal 2015, Avery Dennison (AVY) reported net sales of $5,966.9 million, a fall of 5.7% year-over-year. Its net income and EPS rose to $274.3 million and $2.95, respectively, in fiscal 2015, compared to $245.1 million and $2.56, respectively, in fiscal 2014.

Meanwhile, its cash and cash equivalents and inventories fell by 23.4% and 2.7%, respectively, in fiscal 2015. Its current ratio and long-term debt-to-equity ratio rose to 1.22x and 1.0x, respectively, in fiscal 2015, compared to 1.21x and 0.90x, respectively, in fiscal 2014.

During fiscal 2015, it repurchased 3.9 million shares at an aggregate cost of $232 million.

The price-to-earnings and price-to-book value ratios of Avery Dennison were 23.4x and 6.5x, respectively, as of March 15, 2016.

Avery Dennison has projected its EPS to be in the range of $3.15–$3.35 and its adjusted EPS to be in the range of $3.65–$3.85.

For ongoing analysis, you can visit Market Realist’s Consumer Discretionary page.

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