Avery Dennison’s fourth quarter was met with a positive market reaction, despite revenue slightly trailing Wall Street’s expectations. Management attributed the quarter’s performance to ongoing shifts in its product mix, emphasizing the expansion of high-value categories and sustained growth in its Intelligent Labels business. CEO Dion Stander highlighted that “our results demonstrate the resilience of our model as we remain focused on driving outsized growth in high-value categories.” However, trade policy changes and softer consumer sentiment weighed on core segments, while operational discipline and productivity initiatives helped maintain margins amid higher employee-related costs.
Is now the time to buy AVY? Find out in our full research report (it’s free for active Edge members).
Avery Dennison (AVY) Q4 CY2025 Highlights:
- Revenue: $2.27 billion vs analyst estimates of $2.28 billion (3.9% year-on-year growth, 0.5% miss)
- Adjusted EPS: $2.45 vs analyst estimates of $2.38 (2.9% beat)
- Adjusted EBITDA: $367 million vs analyst estimates of $368.2 million (16.2% margin, in line)
- Adjusted EPS guidance for Q1 CY2026 is $2.43 at the midpoint, above analyst estimates of $2.40
- Operating Margin: 10.6%, down from 12% in the same quarter last year
- Organic Revenue was flat year on year (miss)
- Market Capitalization: $14.74 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Avery Dennison’s Q4 Earnings Call
- George Staphos (BofA Securities) asked for more detail on the 40 basis point margin drop; CFO Gregory Lovins explained the decline resulted from softer base volumes, wage inflation, and one-time items, partially offset by productivity measures.
- Ghansham Panjabi (Robert W. Baird) questioned growth prospects for Intelligent Labels and high-value categories; CEO Dion Stander expects growth to improve in 2026, driven by new customer adoption and expanded use cases.
- John McNulty (BMO Capital Markets) asked about margin differentials in high-value categories; Lovins clarified these categories deliver higher margins, and their increased share has lifted overall gross profit margins since 2019.
- Jeff Zekauskas (JPMorgan) inquired about the Walmart partnership’s impact; Stander said the deal has spurred interest from other grocers and expects more pilots in the pipeline but no immediate additional rollouts.
- Josh Spector (UBS) pressed on apparel market trajectory; Stander explained the Q4 apparel decline outpaced expectations due to cautious retailer behavior, with growth expected to gradually recover if consumer sentiment stabilizes.
Catalysts in Upcoming Quarters
Looking forward, our team will watch (1) the pace of high-value category adoption, especially in Intelligent Labels and food logistics, (2) the impact of tariff and trade-related headwinds on apparel and general retail recovery, and (3) the effectiveness of productivity and automation initiatives in offsetting wage inflation. Progress in digital transformation and customer pipeline expansion will also be critical indicators.
Avery Dennison currently trades at $190.69, up from $186.82 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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