Avery Dennison Corp (AVY) Stock Analysis and Metrics

Avery Dennison

NYSE: AVY

$160.39 ▼ -2.67 (-1.64%)

At close: Jul 17, 2026 · 3:59 PM UTC

Financial Ratios

Market Cap12.53 Bn

P/E18.16

P/S1.39

Div. Yield0.02

ROIC (Qtr)0.00

Total Debt (Qtr)3.79 Bn

Revenue Growth (1y) (Qtr)6.99

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About

Avery Dennison Corporation is a global leader in materials science and digital identification solutions, designing and developing labeling and functional materials, radio-frequency identification inlays and tags, software applications that connect the physical and digital, and branded packaging products that improve customer experience.

The company generates revenue by selling its pressure-sensitive label materials, graphics and reflective products, performance tapes, and mechanical fasteners through its Materials Group, as well as RFID solutions, branding and information products, and shelf edge productivity solutions through its Solutions Group.

The company operates through the following segments: Materials Group and Solutions Group.

• Materials Group: This segment is a leading global provider to the pressure-sensitive label and graphics industries, manufacturing and selling Fasson, JAC, and Avery Dennison brand pressure-sensitive label materials and performance tapes, Avery Dennison and Mactac brand graphics, and Avery Dennison brand reflective products, which are used by converters for labeling, decorating, and specialty applications in food, home and personal care, beer and beverage, durables, pharmaceutical, wine and spirits, and logistics markets, as well as for architectural, commercial sign, digital printing, construction, automotive, fleet transportation, and traffic and safety applications.

• Solutions Group: This segment provides information and branding solutions that include ultra high frequency RFID solutions, brand embellishments, graphic tickets, tags, labels, and sustainable packaging, as well as item-level RFID, visibility and loss prevention, price ticketing and marking, care, content, and country of origin compliance, brand protection and security, and Vestcom brand shelf edge productivity and media solutions, serving customers in retail, apparel, logistics, food and grocery, and general retail industries.

Avery Dennison Corporation holds a strong position in the materials science and digital identification markets, competing with major players such as UPM Adhesive Materials, Fedrigoni Self-Adhesives, Lintec Corporation, Flexcon Corporation, 3M Company, Orafol Group, Checkpoint Systems, R-pac International, SML Group Limited, Arizon RFID Technology Cayman Co Ltd, and Tageos SAS, while leveraging its technical expertise, size and scale of operations, broad product line, reliable service, product and process innovation, distribution capabilities, and brand strength to maintain and enhance its competitive advantage.

The company serves converters, brand owners, retailers, manufacturers, sign shops, commercial printers, designers, automotive suppliers, electronics manufacturers, building and construction firms, and logistics providers across industries such as home and personal care, apparel, general retail, e commerce, food and grocery, pharmaceuticals, and automotive.

Investment Thesis

▲ Bull case

Avery Dennison Corporation is positioning its Intelligent Labels platform for significant back-half 2026 growth through strategic investments like the $75 million commitment to Williard, which expands the total addressable market by an estimated 75 billion units in condition monitoring applications for food, pharmaceutical, and logistics sectors; this deepens the enterprise-wide platform beyond RFID to capture adjacent high-growth opportunities, with management highlighting Walmart’s rollout across bakery, meat, and deli as a catalyst that has already spurred inbound interest from other major grocery retailers, suggesting the inflection point in food adoption could exceed current expectations and drive stronger-than-anticipated sequential improvement in IL sales starting in Q3 FY26.
The company’s proven ability to manage supply chain security and raw material inflation through proactive pricing, sourcing, and material reengineering—evidenced by its history of successfully navigating inflation cycles and the CFO’s note about reduced timing gaps between cost increases and price implementation—creates a resilient competitive advantage that is underappreciated by the market; this operational agility, combined with scenario planning extended to lower volume and innovation acceleration scenarios, allows Avery Dennison to protect margins while gaining share during periods of customer prebuying and destocking, as seen in the Q1 base label materials growth that more than offset high-value category softness, suggesting the business model’s durability could lead to better-than-expected earnings stability through 2026 despite macroeconomic uncertainty.
Avery Dennison Corporation’s capital allocation discipline, exemplified by the Q1 return of $133 million to shareholders via dividends and buybacks while maintaining a strong balance sheet with net debt to adjusted EBITDA of 2.4x, provides dual upside: the increased quarterly dividend to $1.00 per share signals management’s confidence in sustainable free cash flow generation, and the ongoing share count reduction—down 1.9 million shares year-over-year—amplifies EPS growth beyond organic earnings improvement, with the CFO highlighting increased restructuring savings expectations to over $55 million for the year, which could drive margin expansion if productivity initiatives outperform, particularly as the company targets 100% adjusted free cash flow conversion amid fixed and IT capex of ~$260 million.

Avery Dennison Corporation is positioning its Intelligent Labels platform for significant back-half 2026 growth through strategic investments like the $75 million commitment to Williard, which expands the total addressable market by an estimated 75 billion units in condition monitoring applications for food, pharmaceutical, and logistics sectors; this deepens the enterprise-wide platform beyond RFID to capture adjacent high-growth opportunities, with management highlighting Walmart’s rollout across bakery, meat, and deli as a catalyst that has already spurred inbound interest from other major grocery retailers, suggesting the inflection point in food adoption could exceed current expectations and drive stronger-than-anticipated sequential improvement in IL sales starting in Q3 FY26.
The company’s proven ability to manage supply chain security and raw material inflation through proactive pricing, sourcing, and material reengineering—evidenced by its history of successfully navigating inflation cycles and the CFO’s note about reduced timing gaps between cost increases and price implementation—creates a resilient competitive advantage that is underappreciated by the market; this operational agility, combined with scenario planning extended to lower volume and innovation acceleration scenarios, allows Avery Dennison to protect margins while gaining share during periods of customer prebuying and destocking, as seen in the Q1 base label materials growth that more than offset high-value category softness, suggesting the business model’s durability could lead to better-than-expected earnings stability through 2026 despite macroeconomic uncertainty.
Avery Dennison Corporation’s capital allocation discipline, exemplified by the Q1 return of $133 million to shareholders via dividends and buybacks while maintaining a strong balance sheet with net debt to adjusted EBITDA of 2.4x, provides dual upside: the increased quarterly dividend to $1.00 per share signals management’s confidence in sustainable free cash flow generation, and the ongoing share count reduction—down 1.9 million shares year-over-year—amplifies EPS growth beyond organic earnings improvement, with the CFO highlighting increased restructuring savings expectations to over $55 million for the year, which could drive margin expansion if productivity initiatives outperform, particularly as the company targets 100% adjusted free cash flow conversion amid fixed and IT capex of ~$260 million.

▼ Bear case

Avery Dennison Corporation’s Solutions Group continues to face structural headwinds, with organic sales down 1% in Q1 FY26 driven by mid-single-digit base category declines and only low-single-digit growth in high-value platforms like VESCOM and Embellix, which are insufficient to offset weakness; the Intelligent Labels segment specifically underperformed, down low single digits year-over-year due to softer logistics demand and chip transition inventory management, and while management points to back-half Walmart food rollouts as a catalyst, the logistics business—which contributed to outsized 2025 growth—is lapping prior-year share gains from competitor shortcomings, creating a difficult year-over-year comparison that could persist beyond Q2 as customer inventory normalization takes longer than anticipated, raising doubts about the timing and scale of the expected 2026 IL revenue inflection.
The company’s reliance on pricing actions to offset raw material inflation carries volume risk, particularly in discretionary end markets like apparel where customers are sensitive to cost increases; despite noting some CPG volume growth at the start of 2026, the CEO acknowledged that retailers and brands are evaluating inflation’s impact on end-market demand, and with apparel imports remaining low and inventory-to-sales ratios at their lowest since 2021, any further deterioration in consumer confidence could suppress volumes more severely than anticipated, especially if the current high single-digit sequential inflation in Q2 persists into Q3, potentially triggering a demand contraction that undermines the assumed net price increase and erodes the margin protection from productivity initiatives.
Avery Dennison Corporation’s capital allocation strategy, while disciplined, may be overemphasizing shareholder returns at the expense of growth investments, as the CFO noted that adjusted EBITDA margin in the Solutions Group declined 80 basis points year-over-year due to high employee-related costs, lower base category volumes, and ongoing growth investments—yet the company returned $133 million to shareholders in Q1 alone through dividends and buybacks; this balance raises concerns that the pace of capital return could limit funding for critical innovation-led differentiation in high-potential areas like condition monitoring via Williard or next-gen Intelligent Labels applications, particularly if the expected second-half IL ramp does not materialize as planned, leaving the company vulnerable to margin compression without sufficient top-line growth to sustain long-term value creation.

Avery Dennison Corporation’s Solutions Group continues to face structural headwinds, with organic sales down 1% in Q1 FY26 driven by mid-single-digit base category declines and only low-single-digit growth in high-value platforms like VESCOM and Embellix, which are insufficient to offset weakness; the Intelligent Labels segment specifically underperformed, down low single digits year-over-year due to softer logistics demand and chip transition inventory management, and while management points to back-half Walmart food rollouts as a catalyst, the logistics business—which contributed to outsized 2025 growth—is lapping prior-year share gains from competitor shortcomings, creating a difficult year-over-year comparison that could persist beyond Q2 as customer inventory normalization takes longer than anticipated, raising doubts about the timing and scale of the expected 2026 IL revenue inflection.
The company’s reliance on pricing actions to offset raw material inflation carries volume risk, particularly in discretionary end markets like apparel where customers are sensitive to cost increases; despite noting some CPG volume growth at the start of 2026, the CEO acknowledged that retailers and brands are evaluating inflation’s impact on end-market demand, and with apparel imports remaining low and inventory-to-sales ratios at their lowest since 2021, any further deterioration in consumer confidence could suppress volumes more severely than anticipated, especially if the current high single-digit sequential inflation in Q2 persists into Q3, potentially triggering a demand contraction that undermines the assumed net price increase and erodes the margin protection from productivity initiatives.
Avery Dennison Corporation’s capital allocation strategy, while disciplined, may be overemphasizing shareholder returns at the expense of growth investments, as the CFO noted that adjusted EBITDA margin in the Solutions Group declined 80 basis points year-over-year due to high employee-related costs, lower base category volumes, and ongoing growth investments—yet the company returned $133 million to shareholders in Q1 alone through dividends and buybacks; this balance raises concerns that the pace of capital return could limit funding for critical innovation-led differentiation in high-potential areas like condition monitoring via Williard or next-gen Intelligent Labels applications, particularly if the expected second-half IL ramp does not materialize as planned, leaving the company vulnerable to margin compression without sufficient top-line growth to sustain long-term value creation.

Segments Breakdown of Revenue (2025)

Peer Comparison

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S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	BALL	BALL Corp	88.75 Bn	94.92	6.49	7.14 Bn
2	IP	International Paper Co /New/	24.05 Bn	-33.72	0.99	9.09 Bn
3	AVY	Avery Dennison Corp	12.53 Bn	18.16	1.39	3.79 Bn
4	CCK	Crown Holdings, Inc.	12.47 Bn	-11.53	0.98	5.75 Bn
5	REYN	Reynolds Consumer Products Inc.	5.71 Bn	17.42	1.51	1.53 Bn
6	SON	Sonoco Products Co	5.57 Bn	16.33	0.74	4.69 Bn
7	SLGN	Silgan Holdings Inc	4.87 Bn	17.36	0.74	4.66 Bn
8	GPK	Graphic Packaging Holding Co	3.15 Bn	11.53	0.36	5.75 Bn

Research Tools

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About

Investment Thesis

Segments Breakdown of Revenue (2025)

Segments Breakdown of Revenue (2025)

Peer Comparison

Research Tools

Developers

About

Investment Thesis

Segments Breakdown of Revenue (2025)

Segments Breakdown of Revenue (2025)

Peer Comparison

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