Avery Dennison (NYSE:AVY) - Share price, News & Analysis

Q: What is the Fair Price of AVY when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

AVY ($162.7) is trading below our estimate of [[fair value]] ($431.24)

AVY fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	2/6
Past Performance	2/6
Financial Health	2/6
Dividends	5/6

AVY Stock Overview

Avery Dennison Corporation manufactures and markets pressure-sensitive materials and products in the United States, Europe, Asia, Latin America, and internationally.

Rewards

Trading at 62.3% below our estimate of its fair value

Earnings are forecast to grow 8.18% per year

Earnings have grown 22.2% per year over the past 5 years

Pays a reliable dividend of 1.84%

Trading below our calculated fair Price-To-Earnings ratio

Analysts in good agreement that stock price will rise by 26.6%

Risk Analysis

Has a high level of debt

Significant insider selling over the past 3 months

Avery Dennison Competitors

Amcor

NYSE:AMCR

US$15.9b

Packaging Corporation of America

NYSE:PKG

US$10.5b

International Paper

NYSE:IP

US$11.5b

WestRock

NYSE:WRK

US$7.9b

Price History & Performance

Summary of all time highs, changes and price drops for Avery Dennison
Historical stock prices
Current Share Price	US$162.70
52 Week High	US$229.24
52 Week Low	US$151.62
Beta	0.98
1 Month Change	-12.28%
3 Month Change	-1.06%
1 Year Change	-22.39%
3 Year Change	46.10%
5 Year Change	62.15%
Change since IPO	897.40%

Recent News & Updates

Sep 12

Here's Why Avery Dennison (NYSE:AVY) Can Manage Its Debt Responsibly

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility...

Aug 29

Avery Dennison: The Easy Money Has Been Made, But Further Upside Potential Exists

Summary Avery Dennison has done well to increase its sales and profits over the past couple of quarters. Management also now has a more favorable view of the 2022 fiscal year, but it's also true that the easy money has been made. Upside from here is more limited, but it is still enough to warrant investor consideration. One of the more niche companies I have come across recently has been Avery Dennison (AVY). This producer of pressure-sensitive materials, such as papers, plastic films, metal foils, and fabrics, that are then sold to label printers and converters for the purpose of label production and other related products, also offers the benefit of quality fundamentals and attractive growth. Of course, the picture has not always been this way. Prior to the pandemic, some of the company's fundamental figures were volatile and it was only in 2021 that we began seeing some really nice growth for the enterprise. But fast forward to today, and that growth continues while shares are trading at levels that are not unrealistic. I would argue, of course, that much of the easy money in the company has already been made. But so long as its fundamental health remains robust, I do think there might be some additional upside on the table for investors to benefit from. This is despite the fact that similar companies are trading at levels that are much cheaper by comparison. Strength persists Back in March of this year, I wrote an article about Avery Dennison that took a bullish stance on the firm. I called the company a unique player that was slightly underpriced. I based this assessment not just on the company's share price from a valuation perspective but also on the fact that the company had been exhibiting attractive growth since the pandemic came to an end. At the end of the day, I rated the business a ‘buy’, indicating my belief that it did offer some upside potential for investors relative to the broader market. Since then, the company has performed quite well. At a time when the S&P 500 is down by 3.5%, investors in Avery Dennison would have generated a return of 15.2%. Author - SEC EDGAR Data This increase in price was not because of random market fluctuations alone. I would argue that it was largely driven by continued strength demonstrated by the company. When I last wrote about the firm, we only had data covering through the 2021 fiscal year for the business. Today, we now have data covering the first half of 2022. So far, those numbers are quite robust. For the first half of the year as a whole, revenue came in at just under $4.70 billion. This represents an increase of 13.1% over the $4.15 billion the company generated the same time one year earlier. Author - SEC EDGAR Data This growth in sales was driven by strength across the board. However, the greatest upside on a percentage basis came from its Retail Branding and Information Solutions operations. Revenue here jumped by 32.1% from $1.01 billion to $1.34 billion. It is worth noting, however, that actual organic growth from this set of operations was a more modest but still respectable 12%. The company benefited from its acquisition of Vestcom as well. Given current market conditions, it is fair to put particular scrutiny on the most recent quarter since said uncertainty could result in the picture changing rather rapidly. But what data we do have in this regard is also encouraging. During the second quarter alone, sales came in at $2.35 billion. That's 11.7% above the $2.10 billion generated the second quarter of 2021. With this increase in sales, we have also seen a nice increase in profitability. Consider, as an example, net income. For the first half of the year, net income came in at $412.7 million. That's 4.9% higher than the $393.3 million generated in the first half of 2021. A fair argument is that profitability is not climbing at the same rate that revenue is, therefore implying margin contraction. However, this picture is a little more complicated than that. Yes, for the first half of the year as a whole, margins did decrease, with the company's cost of products sold climbing from 71.8% of revenue to 72.6%. This may not seem like much of a change, but the impact when applied to last year's revenue translates to $67.3 million in additional pre-tax cash flow missing from the business. Management attributed this pain to the net impact of pricing, freight, and raw material costs, as well as to higher employee-related expenses. It was, of course, offset to some degree by greater volume and favorable product mix. Despite this pain, the picture did improve in the second quarter itself, as evidenced by the fact that the cost of products sold, relative to revenue, remained flat in that quarter compared to the same quarter last year. Strong volume and product mix in the second quarter perfectly offset higher pricing, freight, and raw material costs, as well as the aforementioned employee-related expenses. We should also pay attention, of course, to other profitability metrics. Operating cash flow is interesting because, unlike earnings, it actually worsened year over year, following from $476.8 million in the first half of 2021 to $394.4 million the same time this year. If we adjust for changes in working capital, however, it would have risen nicely from $563.7 million to $629.3 million. And over that same window of time, EBITDA for the company also improved, rising from $663.6 million to $742.3 million. Just as was the case with earnings, which shot up by 16.7% from $183.8 million in the second quarter of last year to $214.5 million the same time this year, the real improvement and the other profitability metrics also occurred in the second quarter. Operating cash flow inched up from $267.5 million to $268.2 million. On an adjusted basis, this figure rose from $276.4 million to $323.5 million. Meanwhile, EBITDA for the company shot up from $213.8 million to $384 million. Thanks to the improvements in the second quarter of the year, management now has a more favorable outlook regarding profitability for 2022 as a whole. Previously, the company anticipated earnings per share of between $9.35 and $9.75. This has now been revised up to between $9.60 and $9.90. It's also worth noting that these estimates include a $0.10 per share restructuring charge that should prove to be one-time in nature. Adding that restructuring charge back into the equation, the company should generate net income of $808.7 million for the year. That should translate to a 9.3% increase over the $740.1 million generated in 2021. No guidance was given when it came to other profitability metrics. But if we assume that they will increase at the same rate that earnings should, then we should anticipate adjusted operating cash flow of nearly $1.20 billion and EBITDA of $1.46 billion.

Aug 25

Avery Dennison (NYSE:AVY) Has Announced That It Will Be Increasing Its Dividend To $0.75

The board of Avery Dennison Corporation ( NYSE:AVY ) has announced that it will be paying its dividend of $0.75 on the...

Shareholder Returns

	AVY	US Packaging	US Market
7D	-1.8%	-2.1%	-2.5%
1Y	-22.4%	-27.2%	-23.2%

Return vs Industry: AVY exceeded the US Packaging industry which returned -27.2% over the past year.

Return vs Market: AVY matched the US Market which returned -23.2% over the past year.

Price Volatility

Is AVY's price volatile compared to industry and market?
AVY volatility
AVY Average Weekly Movement	4.2%
Packaging Industry Average Movement	5.1%
Market Average Movement	6.8%
10% most volatile stocks in US Market	15.5%
10% least volatile stocks in US Market	2.8%

Stable Share Price: AVY is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: AVY's weekly volatility (4%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1935	35,780	Mitch Butier	https://www.averydennison.com

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 under the Fasson, JAC, and Avery Dennison brands; graphics products under the Avery Dennison and Mactac brands; and reflective products under the Avery Dennison brand. This segment 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; traffic and safety applications; and sign shops, commercial printers, and designers.

Avery Dennison Fundamentals Summary

How do Avery Dennison's earnings and revenue compare to its market cap?
AVY fundamental statistics
Market Cap	US$13.22b
Earnings (TTM)	US$759.50m
Revenue (TTM)	US$8.95b

17.4x

P/E Ratio

1.5x

P/S Ratio

Is AVY overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
AVY income statement (TTM)
Revenue	US$8.95b
Cost of Revenue	US$6.53b
Gross Profit	US$2.42b
Other Expenses	US$1.66b
Earnings	US$759.50m

Last Reported Earnings

Jul 02, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	9.35
Gross Margin	27.08%
Net Profit Margin	8.48%
Debt/Equity Ratio	166.9%

How did AVY perform over the long term?

See historical performance and comparison

Dividends

1.8%

Current Dividend Yield

30%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is AVY undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for AVY?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for AVY. This is calculated by dividing AVY's market cap by their current preferred multiple.
What is AVY's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$13.22b

AVY key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	1.8x
Enterprise Value/EBITDA	12.1x
PEG Ratio	2.1x

Price to Earnings Ratio vs Peers

How does AVY's PE Ratio compare to its peers?

AVY PE Ratio vs Peers

The above table shows the PE ratio for AVY vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	11.7x
AMCR Amcor	19.8x	8.0%	US$15.9b
PKG Packaging Corporation of America	10.3x	1.0%	US$10.5b
IP International Paper	8.1x	-0.08%	US$11.5b
WRK WestRock	8.5x	20.2%	US$7.9b
AVY Avery Dennison	17.4x	8.2%	US$13.2b

Price-To-Earnings vs Peers: AVY is expensive based on its Price-To-Earnings Ratio (17.4x) compared to the peer average (11.7x).

Price to Earnings Ratio vs Industry

How does AVY's PE Ratio compare vs other companies in the North American Packaging Industry?

Price-To-Earnings vs Industry: AVY is expensive based on its Price-To-Earnings Ratio (17.4x) compared to the North American Packaging industry average (12.6x)

Price to Earnings Ratio vs Fair Ratio

What is AVY's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

AVY PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	17.4x
Fair PE Ratio	18.4x

Price-To-Earnings vs Fair Ratio: AVY is good value based on its Price-To-Earnings Ratio (17.4x) compared to the estimated Fair Price-To-Earnings Ratio (18.4x).

Share Price vs Fair Value

What is the Fair Price of AVY when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: AVY ($162.7) is trading below our estimate of fair value ($431.24)

Significantly Below Fair Value: AVY is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.

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Future Growth

How is Avery Dennison forecast to perform in the next 1 to 3 years based on estimates from 14 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

8.2%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: AVY's forecast earnings growth (8.2% per year) is above the savings rate (1.9%).

Earnings vs Market: AVY's earnings (8.2% per year) are forecast to grow slower than the US market (14.8% per year).

High Growth Earnings: AVY's earnings are forecast to grow, but not significantly.

Revenue vs Market: AVY's revenue (4.3% per year) is forecast to grow slower than the US market (7.7% per year).

High Growth Revenue: AVY's revenue (4.3% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: AVY's Return on Equity is forecast to be high in 3 years time (33.9%)

Discover growth companies

Past Performance

How has Avery Dennison performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

22.2%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: AVY has high quality earnings.

Growing Profit Margin: AVY's current net profit margins (8.5%) are lower than last year (9.3%).

Past Earnings Growth Analysis

Earnings Trend: AVY's earnings have grown significantly by 22.2% per year over the past 5 years.

Accelerating Growth: AVY's earnings growth over the past year (3.5%) is below its 5-year average (22.2% per year).

Earnings vs Industry: AVY earnings growth over the past year (3.5%) underperformed the Packaging industry 12.1%.

Return on Equity

High ROE: Whilst AVY's Return on Equity (39.21%) is high, this metric is skewed due to their high level of debt.

Discover strong past performing companies

Financial Health

How is Avery Dennison's financial position?

Financial Health Score

2/6

Financial Health Score 2/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: AVY's short term assets ($2.9B) do not cover its short term liabilities ($3.0B).

Long Term Liabilities: AVY's short term assets ($2.9B) do not cover its long term liabilities ($3.2B).

Debt to Equity History and Analysis

Debt Level: AVY's net debt to equity ratio (156.7%) is considered high.

Reducing Debt: AVY's debt to equity ratio has increased from 156.6% to 166.9% over the past 5 years.

Debt Coverage: AVY's debt is well covered by operating cash flow (29.8%).

Interest Coverage: AVY's interest payments on its debt are well covered by EBIT (13.9x coverage).

Balance Sheet

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Dividend

What is Avery Dennison current dividend yield, its reliability and sustainability?

Dividend Score

5/6

Dividend Score 5/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

1.84%

Current Dividend Yield

Dividend Yield vs Market

Avery Dennison Dividend Yield vs Market

How does Avery Dennison dividend yield compare to the market?
Segment	Dividend Yield
Company (Avery Dennison)	1.8%
Market Bottom 25% (US)	1.7%
Market Top 25% (US)	4.7%
Industry Average (Packaging)	3.1%
Analyst forecast in 3 Years (Avery Dennison)	1.9%

Notable Dividend: AVY's dividend (1.84%) is higher than the bottom 25% of dividend payers in the US market (1.67%).

High Dividend: AVY's dividend (1.84%) is low compared to the top 25% of dividend payers in the US market (4.73%).

Stability and Growth of Payments

Stable Dividend: AVY's dividends per share have been stable in the past 10 years.

Growing Dividend: AVY's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (30.3%), AVY's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonably low cash payout ratio (36.6%), AVY's dividend payments are well covered by cash flows.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

5.1yrs

Average management tenure

CEO

Mitch Butier (51 yo)

6.5yrs

Tenure

US$12,433,721

Compensation

Mr. Mitchell R. Butier, also known as Mitch, has been the Chief Executive Officer of Avery Dennison Corporation since May 1, 2016 and was as its President since November 1, 2014 until March 1, 2022 and has...

CEO Compensation Analysis

Mitch Butier's Compensation vs Avery Dennison Earnings

How has Mitch Butier's remuneration changed compared to Avery Dennison's earnings?
Date	Total Comp.	Salary	Company Earnings
Jul 02 2022	n/a	n/a	US$760m
Apr 02 2022	n/a	n/a	US$729m
Jan 01 2022	US$12m	US$1m	US$740m
Oct 02 2021	n/a	n/a	US$749m
Jul 03 2021	n/a	n/a	US$735m
Apr 03 2021	n/a	n/a	US$631m
Jan 02 2021	US$9m	US$1m	US$556m
Sep 26 2020	n/a	n/a	US$527m
Jun 27 2020	n/a	n/a	US$521m
Mar 28 2020	n/a	n/a	US$585m
Dec 28 2019	US$8m	US$1m	US$304m
Sep 28 2019	n/a	n/a	US$238m
Jun 29 2019	n/a	n/a	US$243m
Mar 30 2019	n/a	n/a	US$195m
Dec 29 2018	US$9m	US$1m	US$467m
Sep 29 2018	n/a	n/a	US$311m
Jun 30 2018	n/a	n/a	US$270m
Mar 31 2018	n/a	n/a	US$295m
Dec 30 2017	US$9m	US$1m	US$282m
Sep 30 2017	n/a	n/a	US$403m
Jul 01 2017	n/a	n/a	US$384m
Apr 01 2017	n/a	n/a	US$343m
Dec 31 2016	US$10m	US$988k	US$321m
Oct 01 2016	n/a	n/a	US$315m
Jul 02 2016	n/a	n/a	US$307m
Apr 02 2016	n/a	n/a	US$292m
Jan 02 2016	US$7m	US$761k	US$274m

Compensation vs Market: Mitch's total compensation ($USD12.43M) is about average for companies of similar size in the US market ($USD13.04M).

Compensation vs Earnings: Mitch's compensation has increased by more than 20% in the past year.

Leadership Team

Experienced Management: AVY's management team is seasoned and experienced (5.1 years average tenure).

Board Members

Experienced Board: AVY's board of directors are seasoned and experienced ( 11.2 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: AVY insiders have only sold shares in the past 3 months.

Recent Insider Transactions

NYSE:AVY Recent Insider Transactions by Companies or Individuals
Date	Value	Name	Entity	Role	Shares	Max Price
14 Sep 22	SellUS$500,699	Anthony Anderson	Individual		2,800	US$178.82
29 Oct 21	SellUS$303,800	Deena Baker-Nel	Individual		1,400	US$217.00

Ownership Breakdown

What is the ownership structure of AVY?
Owner Type	Number of Shares	Ownership Percentage
State or Government	42,432	0.05%
Individual Insiders	590,726	0.7%
General Public	6,010,216	7.4%
Institutions	74,613,033	91.8%

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Top Shareholders

Top 25 shareholders own 59.68% of the company

Ownership	Name	Shares	Current Value	Change %	Portfolio %
11.97%	The Vanguard Group, Inc.	9,729,543	$1.6b	0.57%	0.04%
7.87%	T. Rowe Price Group, Inc.	6,398,230	$1.0b	7.34%	0.13%
7.84%	BlackRock, Inc.	6,367,477	$1.0b	-5.91%	0.03%
4.66%	State Street Global Advisors, Inc.	3,790,305	$616.7m	-2.05%	0.04%
2.76%	Victory Capital Management Inc.	2,242,414	$364.8m	3.5%	0.41%
2.36%	Lazard Asset Management LLC	1,918,645	$312.2m	9.76%	0.32%
2.02%	Columbia Management Investment Advisers, LLC	1,640,915	$267.0m	17.18%	0.08%
1.99%	Neuberger Berman Investment Advisers LLC	1,620,757	$263.7m	40.57%	0.27%
1.94%	Geode Capital Management, LLC	1,579,747	$257.0m	-0.19%	0.03%
1.82%	Fiduciary Management, Inc.	1,475,661	$240.1m	299.63%	1.96%
1.4%	J.P. Morgan Asset Management, Inc.	1,139,276	$185.4m	17.72%	0.04%
1.19%	Invesco Ltd.	967,705	$157.4m	-2.27%	0.05%
1.18%	Lord, Abbett & Co. LLC	962,078	$156.5m	-18.79%	0.57%
1.04%	The Public Investment Fund of The Kingdom of Saudi Arabia	848,657	$138.1m	0%	0.05%
1.01%	Northern Trust Global Investments	818,339	$133.1m	-3.94%	0.03%
1%	BNY Mellon Asset Management	814,688	$132.5m	-0.61%	0.03%
0.96%	FMR LLC	781,373	$127.1m	1.02%	0.01%
0.95%	Millennium Management LLC	770,258	$125.3m	114.42%	0.17%
0.9%	Norges Bank Investment Management	730,788	$118.9m	0%	0.02%
0.89%	Dimensional Fund Advisors LP	719,421	$117.0m	-1.27%	0.03%
0.86%	Veritas Investment Management LLP	697,964	$113.6m	17.4%	3.2%
0.83%	Homestead Advisers Corp.	677,958	$110.3m	-4.7%	3.27%
0.75%	Charles Schwab Investment Management, Inc.	611,651	$99.5m	0.71%	0.03%
0.74%	Legal & General Investment Management Limited	599,458	$97.5m	-5.81%	0.03%
0.72%	Invesco Capital Management LLC	588,659	$95.8m	-5.25%	0.08%

Ticker	Exchange	Primary Security	Security Type	Country	Currency	Listed on
AVY	NYSE (New York Stock Exchange)	Yes	Common Stock	US	USD	Jan 1968
AV3	DB (Deutsche Boerse AG)	Yes	Common Stock	DE	EUR	Jan 1968
0HJR	LSE (London Stock Exchange)	Yes	Common Stock	GB	USD	Jan 1968
AVY	BASE (Buenos Aires Stock Exchange)		CEDEAR EACH 3 REP 1 ORD USD1	AR	ARS	Dec 2000
AVYD	BASE (Buenos Aires Stock Exchange)		CEDEAR EACH 3 REP 1 ORD USD1	AR	USD	Dec 2000
A1VY34	BOVESPA (Bolsa de Valores de Sao Paulo)		BDR EACH 2 REPR 1 COM	BR	BRL	Jan 2020

Data	Last Updated (UTC time)
Company Analysis	2022/10/02 00:00
End of Day Share Price	2022/09/30 00:00
Earnings	2022/07/02
Annual Earnings	2022/01/01