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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

2. Avery Dennison's Solid FY2025 Results: A Closer Look

Avery Dennison reported adjusted EPS of $9.53 and $700 million of adjusted free cash flow for the full year 2025, demonstrating the durability of its franchise. In the fourth quarter, the company delivered adjusted earnings per share of $2.45, up 3% compared to the prior year, beating analyst estimates of $2.4. The Materials Group reported sales increased 5%, while Solutions Group sales were up 1.5%. The company's margins are largely in line with historical seasonality, with Gregory Lovins mentioning that base volumes were soft in the quarter, and wage inflation needs to be offset by volume growth.

Publication Date: Feb -09

📋 Highlights
  • 2025 Adjusted EPS & Free Cash Flow:: Delivered $9.53 adjusted EPS and $700M adjusted free cash flow, reflecting franchise durability.
  • Q4 Segment Sales Growth:: Materials Group +5% sales, Solutions Group +1.5% (organic -1% and +1.3% respectively).
  • Intelligent Label Platform Growth:: Mid-single-digit growth in 2025, with stronger 2026 H2 outlook despite apparel volume declines.
  • High-Value Category Impact:: 60% of Solutions Group portfolio, driving 2-point gross margin expansion over recent years.
  • Walmart Agreement Impact:: Anticipated 5-10% of 2025 sales by 2027, with Q3 2026 rollout and Q4 ramp-up.

Segment Performance

The Materials Group organic sales were down approximately 1%, while the Solutions Group sales were up 1.3% organically. The enterprise-wide intelligent label platform saw sales grow mid-single digits compared to the prior year, driven by growth in key market segments and a partial recovery in apparel. Dion Stander highlighted the importance of high-value categories, which have secular tailwinds and contribute to enterprise growth and portfolio strength.

Guidance and Outlook

The company expects reported sales growth of 5% to 7% in 2026, driven by organic growth of zero to 2%, currency translation, and the Taylor Adhesives acquisition. The guidance does not presume an improvement in external market conditions, and earnings growth is expected to be driven by benefits of organic volume mix growth and productivity actions. The company anticipates mid-single-digit plus growth in high-value categories, with specific growth rates anticipated for VESCOM and Embellix.

Valuation and Metrics

With a P/E Ratio of 21.54 and an EV/EBITDA of 14.07, the market seems to be pricing in a certain level of growth. The company's ROIC of 12.31% and ROE of 31.18% indicate a strong return on investment. The Net Debt / EBITDA ratio of 2.71 suggests a manageable debt burden. Analysts estimate next year's revenue growth at 3.9%, which is slightly higher than the company's expected organic growth.

Intelligent Labels and High-Value Categories

Dion Stander stated that the company had low single-digit growth in intelligent labels in 2025 and is anticipating above that growth rate in 2026. The biggest impact in 2025 was on apparel and general merchandise due to tightened tariff activity. The company believes in significant growth opportunities in the platform and is seeing adoption in individual segments such as apparel and loss prevention.

Operational Highlights

The company is focused on driving growth in high-value categories, leveraging its digital journey, and accelerating innovation. Avery Dennison is also making progress in ensuring a balanced paper supply, with multiple sources and a strategic approach to procurement. The company is increasing CapEx to $260 million in 2026, below pre-pandemic levels, for growth projects, delayed maintenance, and cost savings initiatives.

3. NewsRoom

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ABN Amro Investment Solutions Has $2.69 Million Stock Holdings in Avery Dennison Corporation $AVY

Feb -16

Source: defenseworld.net

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Insider Selling: Avery Dennison (NYSE:AVY) SVP Sells $223,050.20 in Stock

Feb -12

Source: defenseworld.net

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Avery Dennison Corporation (AVY) Q4 2025 Earnings Call Transcript

Feb -04

Source: seekingalpha.com

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Avery Dennison Earnings Beat Estimates in Q4, Revenues Rise Y/Y

Feb -04

Source: zacks.com

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Compared to Estimates, Avery Dennison (AVY) Q4 Earnings: A Look at Key Metrics

Feb -04

Source: zacks.com

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Avery Dennison (AVY) Beats Q4 Earnings Estimates

Feb -04

Source: zacks.com

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Avery Dennison Announces Fourth Quarter and Full Year 2025 Results

Feb -04

Source: businesswire.com

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Avery Dennison Stock to Report Q4 Earnings: Here's What to Expect

Feb -02

Source: zacks.com

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

Strength

Weaknesses

Opportunities

Threats

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

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Avery Dennison

A-Score: 5.1/10

Value: 3.9

Growth: 5.3

Quality: 5.4

Yield: 3.0

Momentum: 4.0

Volatility: 9.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

196.37$

Current Price

196.37$

Potential

-0.00%

Expected Cash-Flows