Avery Dennison (NYSE:AVY) and Pitney Bowes (NYSE:PBI) are both industrial products companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, earnings, analyst recommendations, profitability and valuation.
Valuation and Earnings
This table compares Avery Dennison and Pitney Bowes' top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Avery Dennison | $7.07 billion | 2.31 | $303.60 million | $6.60 | 29.87 |
| Pitney Bowes | $3.21 billion | 0.45 | $194.61 million | $0.68 | 12.26 |
Avery Dennison has higher revenue and earnings than Pitney Bowes. Pitney Bowes is trading at a lower price-to-earnings ratio than Avery Dennison, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Avery Dennison and Pitney Bowes' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Avery Dennison | 7.80% | 44.88% | 9.56% |
| Pitney Bowes | -0.71% | 49.74% | 1.06% |
Risk and Volatility
Avery Dennison has a beta of 0.95, suggesting that its share price is 5% less volatile than the S&P 500. Comparatively, Pitney Bowes has a beta of 2.91, suggesting that its share price is 191% more volatile than the S&P 500.
Analyst Ratings
This is a summary of recent recommendations and price targets for Avery Dennison and Pitney Bowes, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Avery Dennison | 1 | 3 | 8 | 0 | 2.58 |
| Pitney Bowes | 0 | 2 | 1 | 0 | 2.33 |
Avery Dennison presently has a consensus price target of $176.70, indicating a potential downside of 10.36%. Pitney Bowes has a consensus price target of $6.00, indicating a potential downside of 28.06%. Given Avery Dennison's stronger consensus rating and higher possible upside, equities analysts clearly believe Avery Dennison is more favorable than Pitney Bowes.
Institutional & Insider Ownership
89.0% of Avery Dennison shares are owned by institutional investors. Comparatively, 73.9% of Pitney Bowes shares are owned by institutional investors. 1.1% of Avery Dennison shares are owned by company insiders. Comparatively, 3.6% of Pitney Bowes shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Dividends
Avery Dennison pays an annual dividend of $2.48 per share and has a dividend yield of 1.3%. Pitney Bowes pays an annual dividend of $0.20 per share and has a dividend yield of 2.4%. Avery Dennison pays out 37.6% of its earnings in the form of a dividend. Pitney Bowes pays out 29.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Avery Dennison has raised its dividend for 8 consecutive years and Pitney Bowes has raised its dividend for 1 consecutive years. Pitney Bowes is clearly the better dividend stock, given its higher yield and lower payout ratio.
Summary
Avery Dennison beats Pitney Bowes on 12 of the 17 factors compared between the two stocks.
