Avery Dennison Corporation AVY
Verdict: Sell. Fair value $142 against a price of $182 on 5 Jan 2026, 22% below the price.
In plain words
The case for: Narrow competitive moat provides durability. Market leadership enables pricing power.
The case against: Significant drop in Net Income in 2023 ($0.50B) vs 2022 ($0.76B) despite robust OCF, suggesting....
Main risks
- Deteriorating Profitability: Net Income and Proxy EBIT are lower in 2024 than 2021 despite revenue growth.
- High Leverage: Net Debt/EBITDA of 3.7x and Debt/Equity of 1.36 indicate elevated financial risk.
- Negative Capital Returns: ROIIC is negative (-26%) as operating profits contracted while the capital base expanded.
- Overhang: Valuation concerns following recent share price recovery are generating cautious headlines...
- Market volatility
- Execution risk