AVERY DENNISON CORPORATION (AVY): what the price assumes

In the published model solve dated 2026-Q2, anchored at $177.75, AVERY DENNISON CORPORATION (AVY) is priced for +5.5% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/AVY

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 8% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: n/a

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.0%); the inversion above states its own rate.

Per-Model Detail (n=13)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• Avery Dennison coats the films and papers that become labels, a trade whose filing says entry of competitors into the field of pressure-sensitive adhesives and materials is limited by technical knowledge and capital requirements, and the payoff shows up as roughly 30% earned on a book equity base of $29.88 a share.

• The growth story the price leans on is currently going backwards: the enterprise-wide intelligent-label platform came to roughly $0.9 billion of 2025 sales and declined low single digits year over year.

• Second-quarter results arrive July 30, 2026, and management has guided second-quarter 2026 reported earnings of $2.21 to $2.31 a share.

Bull Case

Companies filed under basic materials are usually valued the way you value a mill: against replacement cost, mid-cycle spreads, and the capital it takes to keep the plant running. Avery Dennison sits inside that classification and refuses to behave like it. Roughly $9.0 billion of annual revenue becomes $957.7 million of operating profit on a book equity base of $29.88 a share, which is about 30% earned on what shareholders have put in. The comparable set does not look like that. PPG converts about 12.8% of sales into operating profit, KMB 14.1%, PKG 11.7%, AVNT 9.1%, and every one of them carries the heavy asset base that goes with those businesses. This is a converter and a formulator, not a mill, and the difference lives in the denominator rather than the numerator.

The filing makes the barrier argument itself, without hedging: We believe that entry of competitors into the field of pressure-sensitive adhesives and materials is limited by technical knowledge and capital requirements. That is not a claim about brand. It is a claim about coating lines, adhesive chemistry, and the qualification a label converter has to run before it will change supplier on a product already in the market. The company expensed $137 million in 2025 on research and development pointed at exactly that. For a business this size, that is a steady and unspectacular investment in remaining awkward to replace.

The revenue mix is also more varied than the sector label suggests. Labels, graphics and reflectives account for about 60% of the business, apparel and related products another 20%, and identification solutions roughly 11%, a line the filing describes as tickets, tags, labels (including RFID inlays), as well as related equipment, services and supplies. Three customer bases, three cycles. And Approximately 40% of our net sales in 2025 originated in emerging markets, which is where label volume grows fastest, because label volume tracks the packaged-goods economy rather than the industrial one.

Now the bar the price actually sets, which is the part most likely to surprise. Today's quote pays about 17 times company-wide operating income, and reading that backwards produces a requirement of roughly 2.4% annual growth in operating profit over a five-year stretch. Avery Dennison's own recent record averages nearer 4%. Finding a business that earns 30% on its book while the market asks it to grow more slowly than it has been growing is not a common arrangement, and it is the bull thesis in a single sentence.

Capital allocation says management reads it the same way. The board lifted the quarterly dividend about 6% to $1.00 a share in April 2026, the share count has come down about 1.9% a year over the four years to March 2026, and debt gets retired rather than perpetually rolled: the company repaid our $300 million of senior notes at maturity using cash flows from operations in August 2024. Interest is covered 7.2 times. None of this is dramatic. Compounding rarely is.

Bear Case

Here is the fact a holder has to sit with. The piece of Avery Dennison that carries the growth narrative, the intelligent-label platform built on RFID, accounted for roughly $0.9 billion of enterprise-wide sales in 2025 and declined low single digits year over year, with logistics down low double digits while apparel and general retail managed only low single-digit gains. The premium in this price is being paid for an adoption curve that is currently pointing down. That may turn out to be a pause. It is not, at the moment, growth.

The core business carries a structural exposure the classification does advertise, and it is real. In the filing's own words, our sales and profitability depend upon the availability and cost of raw materials and energy, which may be subject to significant price fluctuations, and our ability to control or offset increases in raw material and labor costs. Paper, film and adhesive chemistry go in one end; the recovery of those costs is negotiated with a customer base that keeps getting larger. The company is blunt about that too: Further consolidation may increase pressure from customers for us to lower our selling prices. A converter squeezed between commodity inputs it does not set and buyers who are consolidating has both ends of its profitability decided by somebody else.

Demand is lumpier than a label business sounds, as well. The company notes it is exposed to changes in customer order patterns, meaning inventory decisions taken by its customers rather than by end consumers, which is the mechanism that makes a de-stocking cycle land harder on a supplier than on the market it serves. Across the comparable set that cycle is plainly visible: CE's revenue fell 5.5% year over year, EMN's 7.7%, SLVM's 11.0%, and GPK's was flat. Nothing in this industry is currently pulling anyone along.

Then the arithmetic, which cuts differently than it first looks. The price requires only about 2.4% annual growth in operating profit over a five-year stretch, and that seems undemanding. It seems undemanding because of what the calculation charges for waiting. Move the required return by one percentage point and the growth the price needs moves by roughly 6.8 points. So the real exposure at this price is a rate, not a business. The methods that charge a higher return for waiting say so without ambiguity: the price sits about 38% above where the asset-value methods land, roughly 53% above the earnings-power methods, and about 62% above the peer-multiple methods. Only the forward-growth methods reach it.

The balance sheet is not the problem, and the bear does itself no credit pretending otherwise. Net debt near 3.52 billion dollars is 3.67 times operating profit, interest is covered 7.2 times, cash is not being burned, and both notes and shares are being retired. What that does is remove leverage as a third variable, which leaves the bear exactly where it started: a premium paid for a platform that shrank last year, resting on arithmetic that makes the premium look modest only because of an assumption about the cost of money.

Valuation

The most useful number here is also the easiest to misread. At $160.94 the market pays about 17 times company-wide operating income, and reading that multiple backwards gives a requirement of roughly 2.4% annual growth in operating profit over a five-year stretch. Measured against a company whose own recent record averages nearer 4%, that is a low bar. The interesting question is what makes it low.

What makes it low is the rate. The calculation charges just under 8% for the wait and lets growth settle at 4% after the explicit period, and it is remarkably sensitive to the first of those: one percentage point added to the required return moves the growth the price needs by about 6.8 points. Change nothing whatever about the business and charge a tenth instead for waiting, and a modest requirement becomes a demanding one. A buyer at this price takes a view on Avery Dennison and, intentionally or not, a view on the cost of money.

The methods that charge more for waiting say exactly what you would expect them to. The price sits about 38% above where the asset-value methods land, roughly 53% above the earnings-power methods, and about 62% above the peer-multiple methods. Only the forward-growth methods reach it, and one of those gets there by holding today's operating multiple flat through the projection, which is closer to assuming the answer than testing it. The pattern is a durability premium, and its source is not mysterious: static frames are built to value a book, and this book is small relative to what it earns.

That deserves its own beat, because the asset-value methods disagree with each other more sharply than they disagree with the price. The one that credits the current return on equity and lets it decay gradually lands close to today's quote. The one that converges that return to the cost of equity straight away lands far beneath it. Both are looking at the same 30% return on a book of $29.88 a share. They differ only on how long a company can go on earning it, and that, rather than any multiple, is the real argument about this company.

Among its comparables the profit per sales dollar is upper-half rather than exceptional. PPG converts about 12.8% of sales into operating profit and KMB 14.1%, both ahead of Avery Dennison's 10.8%; PKG runs 11.7%, AVNT 9.1%, GPK 7.0%, SLVM 5.8%. So the distinguishing feature is not what the company earns per dollar of sales. It is how little capital it ties up to earn it, and that is precisely the thing a peer-multiple comparison on sales or earnings cannot see.

The balance sheet supports the position without doing the work. Net debt near 3.52 billion dollars stands at 3.67 times operating profit, interest is covered 7.2 times, and both borrowings and shares have been coming down: the company repaid our $300 million of senior notes at maturity using cash flows from operations in August 2024, and the following March retired a €500 million maturity with the proceeds of a fresh issue. The share count has fallen about 1.9% a year over the four years to March 2026. What that combination buys is time, which is the only thing a balance sheet can buy for a thesis that needs a growth platform to turn back up.

Catalysts

The next dated event arrives at the end of July. Avery Dennison releases second-quarter 2026 results on the morning of July 30, 2026, with a management call later the same day, and has already guided second-quarter 2026 reported earnings of $2.21 to $2.31 a share.

The first quarter set the baseline for that print. Net sales came to about $2.3 billion, up 7.0% as reported and up 1.1% organically once currency and acquisitions are stripped out, with reported earnings of $2.18 a share. The two halves moved in opposite directions: Materials Group sold roughly $1.6 billion, while Solutions Group sold $649 million, down 2.8% as reported and down 0.9% organically. Solutions Group is the smaller half and the one that matters more to the argument, because it houses the intelligent-label platform.

Two things in the July release will move the thesis further than the headline will. The first is whether the intelligent-label line stops shrinking. At roughly $0.9 billion of enterprise-wide sales in 2025 it is not large enough to swing the consolidated total by itself, but it is what the premium in the price is being paid for, and a second year of decline is a different fact from one. The second is the pace of capital return. The board raised the quarterly payout about 6% to $1.00 a share in April 2026, and a company lifting a dividend while it retires stock is making a fairly clear statement about where it expects the cash to go.

Peer Cohorts (Per Segment, With Filing Citations)

Materials Group (reported)

• AVNT (AVIENT CORPORATION)
• FY2025 10-K: …and/or biomaterial technologies. We also have what we believe is the broadest composite platform of solutions, which include a full range of thermoset and thermoplastic composites, reinforced with glass, carbon, aramid, and ultrahigh molecular weight polyethylene fibers. These solutions meet a wide variety of unique…
• FY2025 10-K: …us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:CrossCurrencyInterestRateContractMember avnt:January2029Member us-gaap:NetInvestmentHedgingMember 2025-12-31 0001122976 us-gaap:OtherCurrentLiabilitiesMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:CrossCurrencyInterestRateContractMember…
• CE (CELANESE CORPORATION)
• FY2025 10-K: Asia and consist of 51 global production facilities and an additional 20 strategic affiliate production facilities. As of December 31, 2025, we employed 11,434 people worldwide. Business Segment Overview We operate principally through two business segments: Engineered Materials and the Acetyl Chain. See Business…
• FY2025 10-K: …Engineered Materials business segment. The Company manages its Acetyl Chain business segment by leveraging its ability to sell chemicals externally to end-use markets or downstream to its acetate tow, intermediate chemistry, emulsion polymers, redispersible powders and ethylene vinyl acetate polymers businesses.…
• EMN (EASTMAN CHEMICAL CO)
• FY2025 10-K: …(Fo Gang) Specialty Resins Limited Chang Chun Petrochemical Co., Ltd. polyvinyl alcohol butyraldehyde 2-ethyl hexanol ethanol triethylene glycol vinyl acetate monomer transportation (automotive safety glass, automotive acoustic glass, and HUD) building and construction (PVB for architectural interlayers) Performance…
• FY2025 10-K: …maintaining a financial profile that supports a solid investment grade credit rating is important to its long-term strategy and financial flexibility. The Company employs a disciplined and balanced approach to capital allocation and deployment of cash. The priorities for uses of available cash include paying the…
• PPG (PPG INDUSTRIES INC)
• FY2025 10-K: …July 2018 and Assistant General Counsel and Secretary from April 2011 through February 2016. (i) Mr. Hagerty served as Vice President, Global Automotive Refinish Coatings from January 2020 through April 2023 and as Vice President, Global Industrial Coatings from January 2019 through December 2019. (j) Ms. Hefel…
• FY2025 10-K: …relates to the possible future abatement of asbestos contained in certain PPG production facilities. The asbestos in PPG's production facilities arises from the application of normal and customary building practices in the past when the facilities were constructed. This asbestos is encapsulated in place and, as a…
• RPM (RPM International Inc.)
• FY2025 10-K: …country:US 2025-05-31 0000110621 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:MutualFundMember country:US 2025-05-31 0000110621 us-gaap:OperatingSegmentsMember rpm:SpecialtyProductsGroupSegmentMember srt:AsiaPacificMember us-gaap:NonUsMember 2023-06-01 2024-05-31 0000110621…
• FY2025 10-K: Member rpm:ConstructionProductsGroupSegmentMember country:CA us-gaap:NonUsMember 2023-06-01 2024-05-31 0000110621 rpm:MarginAchievementPlanTwentyTwentyFiveMember us-gaap:FacilityClosingMember 2022-06-01 2023-05-31 0000110621 rpm:PerformanceCoatingsGroupSegmentMember us-gaap:OperatingSegmentsMember us-gaap:NonUsMember…
• FUL (FULLER H B CO)
• FY2025 10-K: …and build new skills, including online development resources focused on specific business imperatives with access to hundreds of online courses in our learning management system. We utilize an innovative method to deliver leadership training to drive experiential learning and to increase access to leaders around the…
• FY2025 10-K: …2025-01-15 iso4217:GBP 0000039368 ful:HsButylLimitedMember 2024-08-05 2024-08-05 0000039368 ful:HsButylLimitedMember 2024-08-05 0000039368 ful:NdIndustriesMember 2024-05-20 2024-05-20 0000039368 ful:NdIndustriesMember 2024-05-20 0000039368 ful:NdIndustriesMember us-gaap:CustomerRelationshipsMember 2024-05-20…

Solutions Group (reported)

• GPK (Graphic Packaging Holding Co)
• FY2025 10-K: …TN Marion, OH Prosperity, SC Visalia, CA Gresham, OR (a) Mississauga, Ontario (a) Querétaro, Mexico (a) Wausau, WI Groveport, OH (a) Mitchell, SD Shelbyville, IL Wayne, NJ Hamel, MN Monroe, LA (a) Sioux Falls, SD (a)(b) West Monroe, LA Irvine, CA Monterrey, Mexico (a) Solon, OH Winnipeg, Manitoba Kalamazoo, MI New…
• FY2025 10-K: …is vital to the Company, and the Company is committed to the health, safety and wellness of its employees. The Company's Total Recordable Incident Rate, which is the annual rate of workplace injuries per 100 full-time employees, is 0.86, reflecting significantly better performance than the industry average. The…
• REYN (REYNOLDS CONSUMER PRODUCTS INC.)
• FY2025 10-K: …for a significant portion of our revenue. In 2025, sales to our top ten customers accounted for 74% of our total revenue. Three customers each accounted for sales greater than 10% of our total net revenue in 2025. Customers A, B and C accounted for 31%, 17% and 11%, respectively, of our total revenue. Customer A and…
• FY2025 10-K: …categories: food storage bags, trash bags and plastic wrap. Our Presto Products segment also includes our specialty business, which serves other consumer products companies by providing Fresh-Lock and Slide-Rite resealable closure systems. Information by Segment We present segment adjusted EBITDA ("Adjusted EBITDA")…
• SLVM (SYLVAMO CORPORATION)
• FY2025 10-K: CorporateNonSegmentMember 2025-01-01 2025-12-31 0001856485 us-gaap:OperatingSegmentsMember syl:EuropeSegmentMember 2024-01-01 2024-12-31 0001856485 us-gaap:OperatingSegmentsMember syl:LatinAmericaSegmentMember 2024-01-01 2024-12-31 0001856485 us-gaap:OperatingSegmentsMember syl:NorthAmericaSegmentMember 2024-01-01…
• FY2025 10-K: …syl:NorthAmericaSegmentMember 2023-01-01 2023-12-31 0001856485 us-gaap:IntersegmentEliminationMember 2023-01-01 2023-12-31 0001856485 us-gaap:MaterialReconcilingItemsMember syl:EuropeSegmentMember 2023-01-01 2023-12-31 0001856485 us-gaap:MaterialReconcilingItemsMember syl:LatinAmericaSegmentMember 2023-01-01…
• PKG (PACKAGING CORP OF AMERICA)
• FY2025 10-K: 075677 us-gaap:FairValueInputsLevel2Member us-gaap:PensionPlansDefinedBenefitMember us-gaap:FixedIncomeSecuritiesMember 2025-12-31 0000075677 us-gaap:SeniorNotesMember pkg:VariableRateSeniorNotesMember 2025-12-31 0000075677 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2024-12-31 0000075677…
• FY2025 10-K: …2025-12-31 0000075677 us-gaap:SeniorNotesMember pkg:FivePointSevenZeroPercentageSeniorNotesDueDecemberTwoThousandAndThirtyThreeMember 2024-12-31 0000075677 pkg:PerformanceUnitsMember 2024-01-01 2024-12-31 0000075677 us-gaap:FairValueInputsLevel3Member us-gaap:PensionPlansDefinedBenefitMember…
• SW (Smurfit Westrock plc)
• FY2025 10-K: (for Term SOFR loans) or between 0.650 % per annum and 1.275 % per annum (for alternative base rate loans), based upon the Company 's corporate credit ratings (as defined in the Farm Credit Facility Agreement). In addition, Term SOFR loans will be subject to a credit spread adjustment equal to 0.1 % per annum.…
• FY2025 10-K: …or national negotiations in the countries concerned. The majority of our unionized employees in the U.S. are represented by the United Steelworkers. In Europe, we are currently in the process of merging the Smurfit Kappa and the WestRock European Works Councils. The European Works Councils were created to assist in…
• IP (INTERNATIONAL PAPER COMPANY)
• FY2025 10-K: WILL The following table presents changes in the goodwill balances as allocated to each reportable business segment for the years ended December 31, 2025 and 2024 : 86 Table of Contents In millions Packaging Solutions North America Packaging Solutions EMEA Total Balance as of December 31, 2023 Goodwill $ 3,337 $ 76 $…
• FY2025 10-K: …provide resources such as counseling, well-being coaching, financial guidance, identity theft resolution and support for emotional and psychological safety. We believe these services help employees manage stress, build resilience, and achieve personal and professional goals. Our holistic approach to wellness also…
• KMB (KIMBERLY-CLARK CORPORATION)
• FY2025 10-K: …and broad learning opportunities We believe that developing and engaging employees at all levels of the organization is critical to their skill advancement and professional growth. - Continuous listening We hold regular Town Hall meetings where employees can ask executives questions and make their voices heard. We…
• FY2025 10-K: …innovation to capture significant growth available in our product categories by investing in science-based and proprietary technology to solve unmet and evolving consumer needs, and delivering breakthrough storytelling to drive category participation and brand love; • Optimizing our margin structure to deliver…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.