Avery Dennison

Financial Performance

5Y price score: (25)

10Y return: 203.4%

DATE RANGE:

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152.4

52-week range

199.5

182.22

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Required return / cost of capital

FCFF terminal growth rate

Your fair value & Margin of safety

To calculate fair value based on cost of capital and terminal growth assumptions above, please select free cash flow forecast.

Forecast:

Valuation

Free Cash Flow Yield

7.4 %

Dividend Yield TTM

2.1 %

Market cap $

$ 13,810

Price / Earnings TTM

19.7

Price / Book TTM

5.8

PEG TTM

34.4

Earnings growth and return

LTM

5YR

10YR

Total return (price & dividends)

5.7 %

(9) %

203.4 %

Free cash flow per share growth

(8.6) %

45.3 %

165.4 %

Earnings per share growth

5.2 %

32.8 %

197.6 %

Founded: 1,935

Employees: 35,000

Business Summary:Avery Dennison Corporation, headquartered in Glendale, California, is a global enterprise specializing in the manufacturing and distribution of innovative pressure-sensitive materials and related product solutions. Its extensive operations cover regions across the United States, Europe, Asia, and Latin America. The company's business activities are structured into three main divisions: 1. Label and Graphic Materials: This segment provides a broad portfolio of pressure-sensitive label and packaging materials, alongside various graphic and reflective products. Prominent brands under this division include Fasson, JAC, Avery Dennison, and Mactac, offering durable cast and reflective films. These materials serve a wide array of industries, including home and personal care, food, beverages (including beer, wine, and spirits), durable goods, and pharmaceuticals. Additionally, they are crucial for architectural, commercial signage, digital printing, construction, automotive, and fleet transportation applications, as well as traffic and safety solutions, catering to sign shops, commercial printers, and designers. 2. Retail Branding and Information Solutions: This division focuses on designing, producing, and selling brand embellishments, graphic tickets, tags, labels, and sustainable packaging. It also offers creative services, advanced radio-frequency identification (RFID) products, visibility and loss prevention systems, price ticketing and marking solutions, and tools for ensuring compliance with care, content, and country of origin regulations. Furthermore, it provides robust brand protection and security solutions. Its customer base includes retailers, brand owners, apparel manufacturers, distributors, and various industrial clients. 3. Industrial and Healthcare Materials: Within this segment, Avery Dennison supplies an assortment of tapes, pressure-sensitive adhesive-based materials, converted products, medical fasteners, and high-performance polymers under brands like Fasson, Avery Dennison, and Yongle. These specialized offerings are vital to a range of sectors, including automotive, electronics, building and construction, general industrial applications, personal care, and medical markets. The company was founded in 1935 and was initially known as Avery International Corporation, before officially changing its name to Avery Dennison Corporation in 1990.

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Fair Value Reference Estimate

Latest Earnings Call Takeaways

2026 Q3 (Oct 29, 2026)

1) Strong Financial Performance
- Organic sales grew 4% YoY, with adjusted EPS increasing by 2% to $2.42.
- Adjusted free cash flow was robust at over $240 million for the quarter, totaling $716 million year-to-date.
- Reported sales rose 5% YoY to $2.3 billion, with a slight positive contribution from the Taylor Adhesives acquisition.
- Adjusted EBITDA margin was 15.8%, down year-over-year due to cost inflation and pricing impacts.

2) Segment Insights
- Materials Group:
- Organic sales increased by 5%, with both high-value and base categories growing mid-single digits.
- Adjusted EBITDA margin was 16.4%, down approximately 1 point YoY due to pricing pressures and higher employee costs.
- Solutions Group:
- Reported sales were $687 million, down 1.8%, but organic sales grew 1%.
- Adjusted EBITDA margin expanded by 80 basis points to 17.8%, driven by productivity improvements.

3) Market Dynamics and Challenges
- Customer inventory destocking impacted sales by roughly 2 points, with an estimated 3-point headwind in the Materials Group.
- The company noted cautious consumer behavior in end markets, particularly in CPGs, with unit volume expansion remaining muted.
- The logistics segment faced double-digit sales declines due to normalization after significant share gains in 2025.

4) Operational Strategy and Leadership Changes
- Focus on investing in innovation and service-led differentiation to drive share gains.
- Helen Sheirbon has been appointed as the new President of the Solutions Group, effective November 3, bringing extensive leadership experience.
- The company is committed to disciplined capital allocation, returning approximately $135 million to shareholders in Q3 through dividends and share repurchases.

5) Guidance and Outlook
- Full-year 2026 adjusted EPS guidance has been narrowed to $10.10 to $10.24, reflecting a slight increase in the midpoint.
- Anticipated organic sales growth for the year is approximately 3.5%, with reported sales growth expected around 5.5%.
- The company expects the majority of customer inventory destocking to conclude by year-end, with a cautious outlook for consumer behavior into 2027.

Bottom line: Avery Dennison's Q3 results highlight a resilient business with solid financial performance, despite challenges from inventory destocking and cautious consumer sentiment. The company is well-positioned for future growth, particularly in high-value categories, while maintaining strong cash flow and a commitment to shareholder returns.

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