AVY
Avery Dennison Corporation$194.97
Sell
Target $169.75
Report: Mar 07, 2026Industrials • Business Equipment & Supplies • Mature CompounderSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$194.97-12.9%
Rec: SellConviction: High
Entry Target
N/A
N/A
Fair Value
$169.75
(13% below current)
Stop Loss
N/A
N/A
Position Size
None
Time Horizon
N/A
Key Metrics
Live Snapshot
Market Data
52 Week High$199.54
52 Week Low$156.23
Avg. 3 Month Volume659K
Efficiency
LTM Gross Margin28.8%
LTM EBITDA Margin15.7%
LTM EBIT Margin12.0%
LTM Operating Margin12.7%
LTM ROA8.0%
LTM ROE31.2%
LTM ROIC16.8%
LTM ROCE18.5%
Capital Structure
Market Cap (MM)$13.3B
Enterprise Value (MM)$16.8B
Shares Outstanding76.90M
Total Debt (MM)$3.73B
Cash & Equivalents (MM)$202.80M
LTM Net Debt (MM)$3.53B
LTM Net Debt/EBITDA2.5x
Growth
TTM Rev. Growth1.1%
Last 3-Yr Rev. CAGR-0.7%
Last 3-Yr EBITDA CAGR0.4%
Last 3-Yr EPS CAGR-1.8%
Valuation
Street Target Price$221.00
LTM EV/Revenue1.9x
LTM EV/Gross Profit6.6x
LTM EV/EBIT15.8x
LTM EV/EBITDA12.1x
LTM P/E19.3x
LTM EV/FCF23.9x
LTM P/FCF18.9x
LTM P/TB2.3x
LTM P/B5.9x
Dividend Yield2.1%
Payout Ratio42.0%
Executive SummarySituation: Current price is $194.97 versus fair value $169.75 (-12.9% expected return), and valuation confidence is stable. Debate: Bull case depends on Sustained Margin Compression: If wage inflation continues to outpace productivity gains, leading to a multi-quarter decline in operating margins below the 12.7% threshold, the market will likely re-rate the stock to a lower multiple. Bear case centers on Moat Erosion in RFID: The primary risk is the commoditization of RFID technology, where competitors like CCL Industries leverage their scale to undercut Avery Dennison's pricing, leading to permanent margin impairment. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.
Bull Case
Acceleration of RFID adoption in food and logistics segments driven by the Walmart rollout; EU circular economy regulations mandating Digital Product Passports; margin expansion from high-value mix shift reaching 50% of sales.
Bear Case
Commoditization of RFID technology eroding margins; persistent apparel market weakness and tariff exposure; elevated financial risk from a 166.5% debt-to-equity ratio in a rising rate environment.
Key Catalysts
Near-Term (0-6 months)Impact: High
Sustained Margin Compression: If wage inflation continues to outpace productivity gains, leading to a multi-quarter decline in operating mar...
Mid-Term (6-18 months)Impact: Critical
Missed RFID Growth Targets: A failure to achieve mid-single-digit growth in Intelligent Labels, particularly if the Walmart grocery rollout...
Long-Term (18+ months)Impact: Moderate
Avery Dennison is at a critical juncture as it moves to quarterly-only guidance and faces a record leverage ratio of 166.5%, making it highl...
Primary Risks
Concern: Medium
Moat Erosion in RFID: The primary risk is the commoditization of RFID technology, where competitors like CCL Industries leverage their scale...
Concern: High
Financial Distress from Leverage: The mechanism is a sustained increase in interest expense (which rose 15.7% to $135M in FY 2025) combined...
Concern: Medium
The stewardship verdict is 'Adequate but Misaligned.' The board possesses significant financial and M&A expertise, particularly with Audit C...
Recent Activity
2025-10-22SEC Filing (8-K)
+9.48%Avery Dennison reports Q3 2025 preliminary results
2025-01-30SEC Filing (8-K)
-5.40%Avery Dennison reports Q4 and FY 2024 preliminary results
2022-12-08SEC Filing (8-K)
-6.54%Avery Dennison provides business update at Bank of America fireside chat
2022-10-26SEC Filing (8-K)
-7.78%Avery Dennison reported Q3 2022 earnings with 38% EPS growth and narrowed FY 2022 guidance.
2022-07-27SEC Filing (8-K)
+7.24%Avery Dennison reports Q2 2022 preliminary results
Valuation Table
9.8/10Decision Grade
Scenario Range
$135
Bear
$244
Bull
$195