Avery Dennison (AVY) AI Stock Analysis

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Avery Dennison

(NYSE:AVY)

72Outperform

Avery Dennison presents a solid investment opportunity with a strong financial foundation, positive technical indicators, and a fair valuation. The company’s recent earnings call highlighted robust growth and strategic management, despite facing macroeconomic challenges. Its consistent return of capital to shareholders and strategic investments position it well for future growth.

Positive Factors

Earnings Potential

Avery Dennison is in a rare position as a consistent GDP outperformer, driven by a strong management team and growth in high-value categories.

Innovative Growth

Intelligent labels, which are a cornerstone of Avery Dennison's growth engine, have been growing significantly and recently gained key customers in underpenetrated markets.

Market Position

There is limited competitive risk for Avery Dennison in the intelligent labels and radio frequency identification markets.

Negative Factors

Growth Challenges

The near-term growth outlook for Avery Dennison is uncertain due to macroeconomic challenges like weakening consumer spending, slowing e-commerce channels, and escalating trade tensions with China.

Macroeconomic Risks

The deteriorating macro from tariffs and trade war uncertainty weighs heavily on Avery Dennison's emerging market exposure and its exposure to apparel, industrial, and logistics end-markets.

Revenue Impact

Apparel label sales in China for direct U.S. export represent approximately 4% of Avery Dennison's total revenue, which may be impacted by tariffs.

Avery Dennison (AVY) vs. S&P 500 (SPY)

Market Cap

$14.32B

Dividend Yield1.92%

Average Volume (3M)971.84K

Price to Earnings (P/E)21.1

Beta (1Y)0.64

Revenue Growth3.57%

EPS Growth26.92%

CountryUS

Employees35,000

SectorConsumer Cyclical

Sector Strength75

IndustryBusiness Equipment & Supplies

Share Statistics

EPS (TTM)2.30

Shares Outstanding78,175,560

10 Day Avg. Volume692,537

30 Day Avg. Volume971,843

Financial Highlights & Ratios

PEG Ratio-42.71

Price to Book (P/B)6.26

Price to Sales (P/S)0.00

P/FCF Ratio22.76

Enterprise Value/Market Cap1.17

Enterprise Value/Revenue0.48

Enterprise Value/Gross Profit6.64

Enterprise Value/Ebitda2.98

Forecast

1Y Price Target

$198.09

Price Target Upside7.91% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering12

Avery Dennison Business Overview & Revenue Model

Company DescriptionAvery Dennison Corporation (AVY) is a global leader in materials science and manufacturing, specializing in the design and production of a wide range of labeling and functional materials. The company operates across several sectors, including pressure-sensitive materials, retail branding and information solutions, and industrial and healthcare materials. Its core products include pressure-sensitive labels, adhesive technologies, apparel branding labels, and RFID solutions, serving industries such as consumer goods, apparel, logistics, and healthcare.

How the Company Makes MoneyAvery Dennison primarily generates revenue through the sale of its diverse product range to various industries worldwide. The company's key revenue streams include pressure-sensitive materials used in labeling and packaging, retail branding and information solutions like apparel tags and labels, and RFID technologies that enhance supply chain visibility and efficiency. Avery Dennison's revenue is bolstered by its strong partnerships with major global brands and retailers, which rely on its innovative and high-quality solutions to enhance product identification, brand visibility, and operational efficiency. The company's focus on sustainable and advanced material technologies also contributes to its competitive edge and financial performance.

Avery Dennison Financial Statement Overview

Summary

Avery Dennison exhibits a solid financial position with stable revenue and profitability metrics. The balance sheet reflects manageable leverage, and cash flows are robust, supporting operational and strategic activities. Continued focus on maintaining profitability and managing debt levels will enhance financial health.

Income Statement

Positive

Avery Dennison shows a stable financial performance with a consistent gross profit margin and slight decline in net profit margin over the TTM. Revenue growth has been modest but stable. The EBIT and EBITDA margins reflect strong operational efficiency, indicating stable profitability despite economic fluctuations.

Balance Sheet

Positive

The balance sheet reveals a moderate debt-to-equity ratio, suggesting manageable leverage. However, the company should monitor this to prevent potential over-leveraging. Return on Equity is satisfactory, indicating effective use of shareholders' funds. The equity ratio is reasonable, ensuring sufficient asset coverage.

Cash Flow

Positive

The cash flow statements indicate strong operating cash flow relative to net income, suggesting good cash conversion. Free cash flow growth has been positive, though slightly volatile. The company maintains a solid free cash flow to net income ratio, indicating efficient cash management.

TTM	Dec 2024	Dec 2023	Dec 2022	Mar 2022	Mar 2021
Breakdown
Income Statement		Total Revenue
8.75B	8.76B	8.36B	9.04B	8.41B	6.97B
	Gross Profit
2.52B	2.53B	2.28B	2.40B	2.31B	1.92B
	EBIT
1.12B	1.12B	963.80M	1.08B	1.06B	856.70M
	EBITDA
1.41B	1.38B	1.11B	1.37B	1.31B	1.06B
	Net Income Common Stockholders
698.80M	704.90M	503.00M	757.10M	740.10M	555.90M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
185.70M	329.10M	250.10M	167.20M	162.70M	252.30M
	Total Assets
8.26B	8.41B	8.21B	7.95B	7.97B	6.10B
	Total Debt
3.24B	3.15B	3.24B	3.10B	3.10B	2.12B
	Net Debt
3.05B	2.82B	3.03B	2.93B	2.94B	1.86B
	Total Liabilities
6.05B	6.09B	6.08B	5.92B	6.05B	4.60B
	Stockholders Equity
2.20B	2.32B	2.13B	2.03B	1.92B	1.50B
Cash Flow		Free Cash Flow
591.50M	730.00M	540.90M	662.50M	774.70M	532.70M
	Operating Cash Flow
802.70M	938.80M	826.00M	961.00M	1.05B	751.30M
	Investing Cash Flow
-214.30M	-243.10M	-459.00M	-332.70M	-1.74B	-554.20M
	Financing Cash Flow
-576.00M	-576.10M	-317.20M	-615.20M	604.30M	-207.70M

Avery Dennison Technical Analysis

Technical Analysis Sentiment

Positive

Last Price183.57

Price Trends

50DMA

174.69

Positive

100DMA

180.07

Positive

200DMA

193.87

Negative

Market Momentum

MACD

2.54

Negative

RSI

63.19

Neutral

STOCH

93.90

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AVY, the sentiment is Positive. The current price of 183.57 is above the 20-day moving average (MA) of 174.80, above the 50-day MA of 174.69, and below the 200-day MA of 193.87, indicating a neutral trend. The MACD of 2.54 indicates Negative momentum. The RSI at 63.19 is Neutral, neither overbought nor oversold. The STOCH value of 93.90 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AVY.

Avery Dennison Risk Analysis

Avery Dennison disclosed 37 risk factors in its most recent earnings report. Avery Dennison reported the most risks in the “Legal & Regulatory” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Avery Dennison Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CCK	73 Outperform	$11.66B	21.37	21.30%	1.01%	0.90%	34.40%
PKG	73 Outperform	$17.50B	20.33	20.07%	2.57%	9.47%	19.37%
AVY	72 Outperform	$14.32B	21.08	31.95%	1.92%	3.57%	26.92%
SON	71 Outperform	$4.56B	30.14	5.54%	4.48%	-4.58%	-61.14%
BALL	65 Neutral	$15.07B	28.53	8.23%	1.49%	-9.79%	―
Sector *	61 Neutral	$6.97B	11.38	2.88%	3.90%	2.64%	-22.07%
AMCR	56 Neutral	$21.76B	16.94	20.71%	5.35%	-2.29%	24.05%

* Consumer Cyclical Sector Average

Performance Comparison

AVY

Avery Dennison

183.57

-41.70

-18.51%

BALL

Ball

54.33

-15.07

-21.71%

CCK

Crown Holdings

100.15

15.63

18.49%

PKG

Packaging

194.44

17.04

9.61%

SON

Sonoco Products

46.23

-12.59

-21.40%

AMCR

Amcor

9.44

-0.27

-2.78%

Avery Dennison Earnings Call Summary

Earnings Call Date:Apr 23, 2025

(Q1-2025)

% Change Since: 5.00%|

Next Earnings Date:Jul 23, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted significant growth in key segments and strategic initiatives, despite facing macroeconomic uncertainties and tariff-related challenges. The company is well-prepared with a robust strategy and strong financials to navigate potential headwinds.

Q1-2025 Updates

Positive Updates

Strong Earnings Per Share Growth

Earnings per share were up 4% excluding currency, in line with expectations.

Volume Growth in Both Segments

The company experienced volume growth across both segments, particularly in high-value categories such as graphics, reflective solutions, and industrial tapes.

Solutions Group Performance

The Solutions Group reported strong top-line growth and margin expansion, driven by a robust base business and low single-digit growth in high-value solutions.

Intelligent Labels and Food Industry Collaboration

Intelligent labels grew mid-single digits, driven by strong growth in apparel and food categories, with a strategic collaboration with Kroger underway.

Strong Adjusted EBITDA Margin

The company achieved an adjusted EBITDA margin of 16.4% in the quarter, up 10 basis points compared to the prior year.

Balance Sheet and Capital Allocation

The net debt to adjusted EBITDA ratio was 2.3 at quarter-end, with $331 million returned to shareholders through share repurchases and dividends.

Negative Updates

Macroeconomic Uncertainty and Trade Policy Impacts

Elevated macro uncertainty due to dynamic trade policies and reduced global GDP growth outlooks, with potential direct and indirect impacts from tariffs.

Apparel Segment Challenges

The Embellix platform in the Solutions Group was down mid-single digits due to softer sales for large US performance brands.

Tariff-Related Concerns

Recent tariff changes likely to impact discretionary categories, with less than 10% of material purchases affected but potential indirect demand impact.

Negative Free Cash Flow

Free cash flow was negative $50 million in the quarter, attributed to the timing of rebate and incentive payments.

Apparel Revenue Decline Expected

Apparel growth is expected to decline mid-single digits in Q2, influenced by tariff-related sourcing and pricing strategy challenges.

Company Guidance

In the first quarter of fiscal year 2025, Avery Dennison reported a strong performance, with adjusted earnings per share (EPS) increasing by 4% excluding currency impacts, aligning with expectations. The company witnessed a 2% organic sales growth driven by solid volume gains and strategic price management, despite facing deflation-related price reductions. The Materials Group experienced a 1% organic sales increase, supported by low single-digit volume and mix growth, while the Solutions Group saw a 5% organic sales rise, bolstered by a high single-digit increase in base solutions. Adjusted EBITDA margin was reported at 16.4%, with a strong performance across both segments. The company returned $331 million to shareholders through share repurchases and dividends, and reduced its share count by 2.3 million shares compared to the previous year. Looking ahead to the second quarter, Avery Dennison anticipates EPS to range between $2.30 and $2.50, with continued sales growth in most businesses offset by a mid-single-digit decline in apparel sales. The company is actively managing tariff impacts and macroeconomic uncertainties by implementing pricing surcharges and sourcing adjustments, while maintaining its capital allocation discipline and investing in high-value growth opportunities.

Avery Dennison Corporate Events

Executive/Board Changes

Gregory S. Lovins to Resume CFO Role at Avery Dennison

Neutral

Mar 31, 2025

Gregory S. Lovins will resume his role as Avery Dennison’s principal financial officer on April 1, 2025, after a medical leave that began in November 2024. Danny G. Allouche will step down as interim CFO but continue in his other roles. The company’s board approved a base salary of $838,500 for Lovins, maintaining his previous incentive opportunities, as part of their annual executive compensation review.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.