Why Avery Dennison Stock Was Rocking It This Week
Key Points
It is doing innovative work with a major American retailer.
Its partner will soon start using the company's technology in its stores.
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Packaging and labeling materials company Avery Dennison (NYSE: AVY) was wrapping up some appealing gains for its investors over the past few days. A tie-up with a major retailer and a bottom-line beat in its latest earnings report juiced the stock's price. As of Thursday night, it was up by almost 17% in value, according to data compiled by S&P Global Market Intelligence.
Innovation at the deli counter
While the higher-than-expected quarterly profit was encouraging, that partnership was more of a driver of Avery Dennison's share price.
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The company's partner is none other than Walmart. On Wednesday, the two companies announced they have teamed up to design a breakthrough radio-frequency identification (RFID) technology for various categories of fresh food.
Previously, they added, it was thought that RFID solutions were not suitable for cold, moist environments such as meat cases, deli counters, and the like. The two companies said they have developed innovative sensor technology that can function effectively under these conditions.
These RFID solutions will be used in these sorts of places by Walmart. According to it and Avery Denison, the retailer's employees "can track inventory faster and more accurately -- making sure products stay stocked and ready when customers want them."
A bottom-line beat
Separately, the same day, Avery Dennison unwrapped its third-quarter results. For the period, sales increased by slightly over 1% year over year to $2.2 billion, while its net income not in accordance with generally accepted accounting principles (GAAP) rose by 2% to $2.37 per share (the company did not provide a raw number for the metric).
Although net sales were in line with the consensus analyst estimate, the company's adjusted net income recorded a beat -- pundits tracking the stock were expecting $2.33 per share.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Walmart. The Motley Fool has a disclosure policy.
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