Will This Analyst Downgrade Hurt Avery Dennison (AVY) Stock Today?

NEW YORK (TheStreet) -- Topeka Capital downgraded Avery Dennison  (AVY) to "hold" from "buy" and set a $54 price target. The firm said domestic demand momentum has slowed.

The stock closed at $48.95 on Monday.

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Separately, TheStreet Ratings team rates AVERY DENNISON CORP as a "buy" with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate AVERY DENNISON CORP (AVY) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.2%. Since the same quarter one year prior, revenues slightly increased by 4.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $117.80 million or 22.45% when compared to the same quarter last year. In addition, AVERY DENNISON CORP has also vastly surpassed the industry average cash flow growth rate of -95.07%.
  • The debt-to-equity ratio is somewhat low, currently at 0.82, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.82 is somewhat weak and could be cause for future problems.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Containers & Packaging industry and the overall market on the basis of return on equity, AVERY DENNISON CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • You can view the full analysis from the report here: AVY Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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