Avery Dennison Corporation (AVY) | Investment Case

1. Company Snapshot

1.a. Company Description

Avery Dennison Corporation manufactures and markets pressure-sensitive materials and products in the United States, Europe, Asia, Latin America, and internationally.The company's Label and Graphic Materials segment offers pressure-sensitive label and packaging materials; and graphics and reflective products under the Fasson, JAC, Avery Dennison, and Mactac brands, as well as durable cast and reflective films.It provides its products to the home and personal care, beer and beverage, durables, pharmaceutical, wine and spirits, and food market segments; architectural, commercial sign, digital printing, and other related market segments; construction, automotive, and fleet transportation market segments, as well as traffic and safety applications; and sign shops, commercial printers, and designers.

The company's Retail Branding and Information Solutions segment designs, manufactures, and sells brand embellishments, graphic tickets, tags and labels, and sustainable packaging solutions, as well as offers creative services; radio-frequency identification products; visibility and loss prevention solutions; price ticketing and marking solutions; care, content, and country of origin compliance solutions; and brand protection and security solutions.It serves retailers, brand owners, apparel manufacturers, distributors, and industrial customers.The company's Industrial and Healthcare Materials segment offers tapes; pressure-sensitive adhesive based materials and converted products; medical fasteners; and performance polymers under the Fasson, Avery Dennison, and Yongle brands.

It serves automotive, electronics, building and construction, general industrial, personal care, and medical markets.The company was formerly known as Avery International Corporation and changed its name to Avery Dennison Corporation in 1990.Avery Dennison Corporation was founded in 1935 and is headquartered in Glendale, California.

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1.b. Last Insights on AVY

Avery Dennison's recent performance was driven by strong Q3 earnings, with the company reporting $2.37 per share, surpassing the Zacks Consensus Estimate of $2.32 per share. Revenue also rose year-over-year, fueled by productivity gains and steady segment performance. Additionally, the company's collaboration with Walmart to enhance freshness and operational efficiency using RFID technology has positively impacted its prospects. Its acquisition of Meridian's flooring business also expanded its offerings.

1.c. Company Highlights

Last Price	179.33
Change Percentage	2.50%
Open	175.34
Previous Close	174.96
Market Cap ( Millions)	13861
Volume	1076067
Year High	206.45
Year Low	156.23
M A 50	169.46
M A 200	173.83

FCF Yield	4.94%
Dividend Yield	2.06%
ROE	31.28%
Debt / Equity	171.01%
Net Debt / EBIDTA	230.62%
Price To Book	6.33
Price Earnings Ratio	20.12
Price To FCF	20.25
Price To sales	1.58
EV / EBITDA	12.16

2. Avery Dennison's Q3 Earnings: A Closer Look

Avery Dennison reported a solid third quarter with earnings up 2% year over year to $2.37 per share, beating the midpoint of expectations. The company delivered organic sales growth of 1.5% and an adjusted EBITDA margin of 16.5%. The revenue growth was driven by the Solutions Group, which delivered organic sales growth of 4%, while the Materials Group saw a 2% decline in sales on an organic basis. Intelligent Labels sales grew approximately 3% compared to the prior year.

Publication Date: Oct -23

                                    📋 Highlights
                                    Earnings Beat::
                                                Q3 EPS rose 2% YoY to $2.37, exceeding expectations
EBITDA Margin::
                                                Adjusted EBITDA margin held stable at 16.5%
Solutions Group Growth::
                                                4% organic sales growth vs. 2% decline in Materials Group
Walmart Partnership Impact::
                                                Expected to drive 8-12% IL revenue growth over 2 years
Fiscal Calendar Shift::
                                                Adds ~2% sequential Q4 growth due to calendar alignment

                                

Segment Performance

The Solutions Group's growth was a highlight, driven by Intelligent Labels, which saw a 3% increase in sales. The company's partnership with Walmart to leverage Avery Dennison's RFID innovation and solutions in their fresh grocery categories is expected to drive growth in the Intelligent Labels segment. The partnership will focus on three areas: bakery, protein, and deli/meat, with innovative solutions for material science and radio frequency technology.

Outlook and Guidance

The company expects reported sales growth of 5-7% in the fourth quarter, with adjusted EPS growth above the prior year at the midpoint. The guidance is encouraging, considering the trade policy uncertainty. The company has also repurchased approximately $454 million in stock and grown their dividend by 7% year to date. With a fiscal calendar change effective at the end of this year, the company expects an additional 2 points of growth in the fourth quarter.

Valuation and Metrics

With a P/E Ratio of 20.32 and an EV/EBITDA of 12.23, the company's valuation appears reasonable. The Dividend Yield is 2.03%, and the Free Cash Flow Yield is 4.9%. The ROE is 31.28%, indicating strong profitability. The Net Debt / EBITDA ratio is 2.31, which is manageable. Analysts estimate next year's revenue growth at 4.3%, which is slightly higher than the current P/S Ratio of 1.59, suggesting a relatively stable valuation.

Growth Prospects

The company's Intelligent Labels pipeline continues to grow, with opportunities and dollar value increasing across key segments. The Walmart partnership is expected to contribute to high single-digit to low double-digit growth in total enterprise IL revenue over a two-year period. The company is optimistic about 2026, citing continued innovation and adoption. The Embellis business is also expected to grow at a mid- to high-single-digit rate in the long term, driven by its Performance Brands and innovative applications.

3. NewsRoom

Market Today: Fed hopes lift stocks; AWS AI rollout; Prada-Versace deal

Dec -03

Source: gurufocus.com

First Look: Airbus trims targets, AWS AI, AEO hikes outlook

Dec -03

Source: gurufocus.com

Is the Options Market Predicting a Spike in Avery Dennison Stock?

Dec -02

Source: zacks.com

Avery Dennison Corporation $AVY Holdings Raised by Bahl & Gaynor Inc.

Nov -22

Source: defenseworld.net

ABN Amro Investment Solutions Invests $4.24 Million in Avery Dennison Corporation $AVY

Nov -14

Source: defenseworld.net

Avery Dennison Corporation $AVY Stock Position Trimmed by Allspring Global Investments Holdings LLC

Oct -24

Source: defenseworld.net

Why Avery Dennison Stock Was Rocking It This Week

Oct -23

Source: fool.com

Avery Dennison (NYSE:AVY) Trading 7.2% Higher Following Strong Earnings

Oct -23

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.81%)

6. Segments

Materials

Expected Growth: 4.5%

Avery Dennison's 4.5% growth is driven by increasing demand for sustainable packaging, rising e-commerce trends, and growing adoption of RFID technology. The company's focus on innovation, strategic acquisitions, and expansion into emerging markets also contribute to its growth. Additionally, the company's diversified product portfolio and strong brand recognition help to mitigate risks and drive long-term growth.

Solutions

Expected Growth: 5.5%

Avery Dennison's 5.5% growth is driven by increasing demand for sustainable and intelligent packaging solutions, expansion in emerging markets, and strategic acquisitions. The company's focus on innovation, particularly in RFID and digital printing, has also contributed to growth. Additionally, the rising need for supply chain visibility and efficiency has boosted demand for Avery Dennison's labeling and packaging materials.

7. Detailed Products

Label and Packaging Materials

Avery Dennison Corporation provides a wide range of label and packaging materials, including paper and film labels, tags, and tickets, as well as packaging materials for food, beverage, and pharmaceutical industries.

Radio Frequency Identification (RFID) Tags

Avery Dennison Corporation offers a range of RFID tags that enable inventory tracking, supply chain management, and authentication of products.

Intelligent Labels

Avery Dennison Corporation's intelligent labels combine RFID technology with labeling, enabling real-time tracking and monitoring of products.

External Embellishments

Avery Dennison Corporation provides external embellishments such as heat transfers, hot fix rhinestones, and other decorative elements for apparel and footwear.

Brand and Information Solutions

Avery Dennison Corporation offers brand and information solutions, including brand authentication, track and trace, and product information management.

8. Avery Dennison Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Avery Dennison Corporation faces moderate threat from substitutes, as customers have limited alternatives for its products and services.

Bargaining Power Of Customers

Avery Dennison Corporation has a diverse customer base, which reduces the bargaining power of individual customers.

Bargaining Power Of Suppliers

Avery Dennison Corporation has a moderate level of dependence on its suppliers, which can exert some bargaining power.

Threat Of New Entrants

Avery Dennison Corporation operates in a capital-intensive industry, which creates barriers to entry for new entrants.

Intensity Of Rivalry

Avery Dennison Corporation operates in a highly competitive industry, with several established players competing for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	60.39%
Debt Cost	5.07%
Equity Weight	39.61%
Equity Cost	8.54%
WACC	6.44%
Leverage	152.46%

11. Quality Control: Avery Dennison Corporation passed 5 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Ennis

A-Score: 6.7/10

Value: 7.2

Growth: 4.1

Quality: 7.2

Yield: 10.0

Momentum: 2.5

Volatility: 9.0

1-Year Total Return ->

Mueller Industries

A-Score: 6.3/10

Value: 4.5

Growth: 7.1

Quality: 7.9

Yield: 2.0

Momentum: 8.5

Volatility: 8.0

1-Year Total Return ->

MSC Industrial Direct Co

A-Score: 6.1/10

Value: 4.2

Growth: 3.7

Quality: 6.0

Yield: 8.0

Momentum: 6.5

Volatility: 8.3

1-Year Total Return ->

Worthington Industries

A-Score: 5.0/10

Value: 3.6

Growth: 3.1

Quality: 5.7

Yield: 3.0

Momentum: 8.5

Volatility: 6.0

1-Year Total Return ->

Owens Corning

A-Score: 4.9/10

Value: 5.2

Growth: 7.4

Quality: 4.4

Yield: 4.0

Momentum: 2.0

Volatility: 6.3

1-Year Total Return ->

Avery Dennison

A-Score: 4.7/10

Value: 4.1

Growth: 5.3

Quality: 5.4

Yield: 3.0

Momentum: 1.5

Volatility: 9.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

1.51%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.44%

Avery Dennison Corporation - US0536111091

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on AVY

1.c. Company Highlights

Less Volatile

Expensive

Stable Momentum

Earnings Beats

Revenues Beats

Fairly Valued

Average Yield

Average Growth

Revenues Miss

Weak Momentum

2. Avery Dennison's Q3 Earnings: A Closer Look

Segment Performance

Outlook and Guidance

Valuation and Metrics

Growth Prospects

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.81%)

6. Segments

Materials

Expected Growth: 4.5%

Solutions

Expected Growth: 5.5%

7. Detailed Products

Label and Packaging Materials

Radio Frequency Identification (RFID) Tags

Intelligent Labels

External Embellishments

Brand and Information Solutions

8. Avery Dennison Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Avery Dennison Corporation passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

179.33$

Current Price

179.33$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA