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Avery Dennison Corp. (AVY)
NYSE:AVY
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Avery Dennison
(NYSE:AVY)
76Outperform
Positive Factors
Earnings and Financial Performance
AVY beat its initial top- and bottom-line 2024 guidance, delivering strong volume growth and impressive performance despite economic uncertainties.
Growth Potential
Avery's RFID/Intelligent Label business is seen as a significant long-term growth lever, with expected growth of 9-10%.
Valuation
The market's reaction to Avery's price drop is seen as an investment opportunity due to the perceived undue penalty.
Negative Factors
Cost and Margins
Margins in Materials were below forecast for 3Q, with higher upstream paper prices as a pressure point.
Revenue Growth
Slowing IL growth sent the share down to 12-month lows, derating the stock to below its 5-year average.
Stock Performance
The share is trading at 12 months low as the 2024 earnings mix was unfavorable and earnings progression slowed through the year.
Avery Dennison (AVY) vs. S&P 500 (SPY)
Market Cap
$13.92B
Dividend Yield2%
Average Volume (3M)646.61K
Price to Earnings (P/E)20.2
Beta (1Y)0.80
Revenue Growth4.68%
EPS Growth40.68%
CountryUS
Employees35,000
SectorConsumer Cyclical
Sector Strength46
IndustryBusiness Equipment & Supplies
Share Statistics
EPS (TTM)8.72
Shares Outstanding78,965,996
10 Day Avg. Volume595,588
30 Day Avg. Volume646,613
Financial Highlights & Ratios
PEG Ratio0.50
Price to Book (P/B)N/A
Price to Sales (P/S)1.58
Price to Cash Flow (P/CF)9.80
P/FCF Ratio9.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$216.00Price Target Upside22.49% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering10
Avery Dennison Business Overview & Revenue Model
Company DescriptionAvery Dennison Corporation is a global leader in the design and manufacture of a wide range of labeling and functional materials. Operating in sectors such as consumer goods, apparel, and healthcare, the company provides innovative solutions, including pressure-sensitive materials for labels and graphic applications, tapes and labels for the retail apparel industry, and RFID solutions for inventory accuracy. Avery Dennison's focus on sustainability and innovation positions it as a key player in its markets.
How the Company Makes MoneyAvery Dennison makes money primarily through its two main business segments: Label and Graphic Materials (LGM) and Retail Branding and Information Solutions (RBIS). The LGM segment generates revenue by producing and selling pressure-sensitive label and packaging materials, which are used in various industries such as food, beverage, and pharmaceuticals. The RBIS segment contributes to the company's earnings by providing branding and information solutions, including tags, labels, and RFID inlays, which help improve inventory management and supply chain efficiency for retail businesses. Key partnerships with major consumer brands and retailers further enhance Avery Dennison's revenue streams, bolstered by the company's commitment to developing sustainable and innovative products.
Avery Dennison Financial Statement Overview
Summary
Avery Dennison displays strong financial health with consistent revenue growth, solid profitability margins, and effective cash flow management. The company's leverage is moderate, and while it has a strong return on equity, it needs to manage its debt levels prudently. Overall, Avery Dennison's financial statements indicate a well-positioned company in the industrial goods sector with healthy growth prospects.Income Statement
Avery Dennison has demonstrated consistent revenue growth over the years with a notable increase from $8.36 billion in 2023 to $8.76 billion in 2024, marking a revenue growth rate of approximately 4.68%. The gross profit margin improved slightly to 28.90% in 2024. The net profit margin also increased to 8.05%, indicating effective cost management and operational efficiency. EBIT and EBITDA margins are strong at 12.82% and 15.79%, respectively, reflecting robust operational performance.85
Very Positive
Balance Sheet
The debt-to-equity ratio stands at 1.36, indicating moderate leverage. However, the company's return on equity (ROE) improved to 30.39% in 2024, showcasing strong profitability relative to shareholder equity. The equity ratio is 27.58%, reflecting a balanced capital structure. While the company maintains adequate equity, it should be cautious of its debt levels.78
Positive
Cash Flow
Avery Dennison achieved a healthy free cash flow growth rate of 34.91% from 2023 to 2024. The operating cash flow to net income ratio is robust at 1.33, indicating strong cash generation relative to net income. The free cash flow to net income ratio is also favorable at 1.04, demonstrating the company's capacity to generate cash beyond its accounting earnings.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 8.76B | 8.36B | 9.04B | 8.41B | 6.97B | Gross Profit |
| 2.53B | 2.28B | 2.40B | 2.31B | 1.92B | EBIT |
| 1.12B | 963.80M | 1.08B | 1.06B | 856.70M | EBITDA |
| 1.38B | 1.11B | 1.37B | 1.31B | 1.06B | Net Income Common Stockholders |
| 704.90M | 503.00M | 757.10M | 740.10M | 555.90M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 329.10M | 250.10M | 167.20M | 162.70M | 252.30M | Total Assets |
| 8.41B | 8.21B | 7.95B | 7.97B | 6.10B | Total Debt |
| 3.15B | 3.24B | 3.10B | 3.10B | 2.12B | Net Debt |
| 2.82B | 3.03B | 2.93B | 2.94B | 1.86B | Total Liabilities |
| 6.09B | 6.08B | 5.92B | 6.05B | 4.60B | Stockholders Equity |
| 2.32B | 2.13B | 2.03B | 1.92B | 1.50B |
| Cash Flow | Free Cash Flow | |||
| 730.00M | 540.90M | 662.50M | 774.70M | 532.70M | Operating Cash Flow |
| 938.80M | 826.00M | 961.00M | 1.05B | 751.30M | Investing Cash Flow |
| -243.10M | -459.00M | -332.70M | -1.74B | -554.20M | Financing Cash Flow |
| -576.10M | -317.20M | -615.20M | 604.30M | -207.70M |
Avery Dennison Technical Analysis
Negative
176.34
Price Trends
181.52
Negative
187.81
Negative
200.47
Negative
Market Momentum
-1.50
Negative
49.66
Neutral
63.47
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AVY, the sentiment is Negative. The current price of 176.34 is below the 20-day moving average (MA) of 177.89, below the 50-day MA of 181.52, and below the 200-day MA of 200.47, indicating a bearish trend. The MACD of -1.50 indicates Negative momentum. The RSI at 49.66 is Neutral, neither overbought nor oversold. The STOCH value of 63.47 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $13.92B | 20.19 | 31.75% | 2.00% | 4.68% | 40.68% | |
71 Outperform | $17.01B | 21.18 | 19.03% | 2.64% | 7.45% | 5.26% | |
68 Neutral | $4.53B | 27.84 | 6.42% | 4.52% | -6.93% | -65.66% | |
67 Neutral | $3.95B | 14.67 | 45.91% | 2.95% | -1.75% | -21.15% | |
66 Neutral | $25.96B | 31.27 | 6.74% | 3.76% | -1.57% | 84.85% | |
59 Neutral | $12.18B | 11.09 | -1.08% | 3.77% | 1.26% | -19.82% | |
58 Neutral | $1.73B | ― | -7.89% | ― | -8.09% | -1.97% |
* Consumer Cyclical Sector Average
Performance Comparison
AVY
Avery Dennison
170.25
-44.17
-20.60%
IP
International Paper Co
47.98
10.75
28.87%
OI
O-I Glass
10.53
-5.16
-32.89%
PKG
Packaging
183.42
0.34
0.19%
SEE
Sealed Air
24.41
-7.49
-23.48%
SON
Sonoco Products
43.78
-11.10
-20.23%
Avery Dennison Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: -8.14% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Positive
The earnings call conveyed a generally positive outlook with strong financial performance in 2024 and optimistic guidance for 2025. Key achievements included growth in Intelligent Labels and new partnerships with CVS Health and Kroger. However, there were challenges, such as softer than expected Vestcom sales and a decline in the logistics segment for Intelligent Labels.Highlights
Strong Financial Performance in 2024
Sales grew 5%, adjusted EBITDA margin expanded by 130 basis points, and adjusted EPS grew 19% at the high end of original guidance.
Materials Group Growth
Delivered strong top-line growth in 2024 driven by significant volume growth and strong margin expansion. High-value categories and emerging markets were key catalysts.
Progress in Intelligent Labels
Enterprise-wide Intelligent Labels grew 9% on an organic basis in 2024, reaching roughly $900 million in revenue.
New Partnerships and Innovations
Signed a new partnership with CVS Health for Vestcom and announced a strategic collaboration with Kroger for Intelligent Labels.
Positive Outlook for 2025
Expect GDP-plus growth and expanding margins with adjusted EPS of $9.80 to $10.20, up 7% to 12%, excluding currency translation.
Lowlights
Vestcom Sales Below Expectations
Vestcom delivered softer than initially anticipated sales in 2024, primarily due to lower volume in the drugstore channel driven by store closures.
Logistics Segment Decline
Intelligent Labels sales in logistics were lower in 2024 due to the lack of a large RFID program rollout seen in 2023.
Raw Material Pricing Challenges
Year-over-year, some negative raw material pricing is expected to impact 2025, with a slight deflation in Q4 2024 and Q1 2025.
Company Guidance
In the recent earnings call, Avery Dennison provided robust guidance for 2025, projecting adjusted EPS growth of 7% to 12%, excluding currency impacts, with an expected range of $9.80 to $10.20. The company anticipates 3% to 4% organic sales growth, driven by mid-single-digit volume growth, with their high-value categories contributing significantly. Intelligent Labels are expected to grow 10% to 15%, adding 1 to 1.5 points to total company growth. The Materials Group is projected to achieve mid-single-digit volume growth, fueled by strong performance in high-value categories like specialty and durable labels. Furthermore, the Solutions Group is set to witness margin expansion, supported by new rollouts in high-value solutions such as Vestcom, which is expected to deliver strong growth following a new partnership with CVS Health. Overall, Avery Dennison is poised for continued margin expansion and top-quartile returns, bolstered by their strategic focus on high-value categories and disciplined capital allocation.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.