Is Avery Dennison a Value Opportunity After Recent Share Price Slide in 2025?

• Wondering if Avery Dennison is quietly turning into a value opportunity after a choppy run in the market? Let us unpack what the current share price is really implying about its future.
• The stock closed at $172.22 recently, up 1.0% over the last week, but still down 1.5% over 30 days and 6.0% year to date, with a 13.9% slide over the past year while still holding a 20.5% gain over five years.
• Recent coverage has focused on Avery Dennison's strategic push in high value label and materials solutions, alongside ongoing investments in automation and sustainability focused products. These moves help explain why the market is rethinking the company’s long term growth profile and competitive positioning.
• On our checklist of 6 valuation tests, Avery Dennison scores a solid 5 out of 6. This suggests the market may be underestimating it on several fronts. We will break that down using multiple valuation approaches before circling back to an even better way to think about its true worth.

Avery Dennison delivered -13.9% returns over the last year. See how this stacks up to the rest of the Packaging industry.

Approach 1: Avery Dennison Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a business is worth today by projecting its future cash flows and then discounting them back to a present value. For Avery Dennison, this is done using a 2 Stage Free Cash Flow to Equity framework based on cash flow projections.

The company generated about $599.6 million in Free Cash Flow over the last twelve months, and analysts see this rising to roughly $966.9 million by 2027. Beyond those analyst years, Simply Wall St extrapolates further growth, with projected Free Cash Flow reaching around $1.35 billion by 2035, all in $ terms.

When these cash flows are discounted back, the model suggests an intrinsic value around $334.13 per share, indicating the stock is about 48.5% undervalued versus the recent market price. On this view, investors are paying a sizable discount to what the projected cash generation suggests the business is worth.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Avery Dennison is undervalued by 48.5%. Track this in your watchlist or portfolio, or discover 935 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Avery Dennison.

Approach 2: Avery Dennison Price vs Earnings

For a profitable company like Avery Dennison, the price to earnings, or PE, ratio is a practical way to gauge how much investors are willing to pay today for each dollar of current earnings. The higher the expected growth and the lower the perceived risk, the higher a normal or fair PE ratio tends to be, while slower or riskier businesses usually justify lower multiples.

Avery Dennison currently trades on a PE of about 19.14x, which is slightly below the packaging industry average of around 15.71x and close to its direct peer group at roughly 19.49x. Simply Wall St goes a step further by estimating a Fair Ratio of 20.43x, its proprietary view of what the PE should be after accounting for the company’s earnings growth outlook, margins, risk profile, industry dynamics and market capitalization.

This Fair Ratio is more tailored than simple peer or industry comparisons because it adjusts for the specific strengths and risks of Avery Dennison rather than assuming all companies deserve the same multiple. With the shares trading modestly below the 20.43x Fair Ratio, the PE lens points to the stock being slightly undervalued rather than stretched.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Avery Dennison Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple yet powerful way to connect your view of Avery Dennison’s future with clear numbers and a fair value estimate.

A Narrative is the story you tell about a company, expressed through your assumptions for its future revenue, earnings, margins and risk, which then feeds into a financial forecast and a resulting fair value you can compare to today’s price.

On Simply Wall St’s Community page, millions of investors use Narratives to turn their perspective into a dynamic valuation, see whether a stock looks undervalued or overvalued, and decide whether that means buy, hold or sell for them personally.

Because Narratives update as new information arrives, like earnings results or news about Avery Dennison’s RFID expansion and share buybacks, your fair value view can automatically evolve with the facts rather than staying frozen at one point in time.

For example, one Avery Dennison investor might build a bullish Narrative around rapid adoption of smart, sustainable labels and arrive at a fair value near the top analyst target of about $223. Another more cautious investor, focusing on apparel weakness and margin risks, may land closer to the low end near $170. Narratives make both viewpoints explicit, comparable and easy to track against the current share price.

Do you think there's more to the story for Avery Dennison? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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