How Avery Dennison (AVY) Has Been Trading Recently

Avery Dennison (AVY) has seen mixed share performance recently, with a 0.7% decline over the past day, a 1% gain over the past week, and a 1.2% decline over the past month.

Over the past 3 months, the stock shows a 13.6% decline, with a year to date return of negative 9.3% and a 1 year total return of negative 2.3%. Longer term, the 3 year total return stands at 1.5%, while the 5 year total return is negative 18.3%.

The recent 90-day share price return of a 13.6% decline, alongside a 1-year total shareholder return of a 2.3% decline, suggests momentum has been fading even though the latest share price is US$165.53.

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With Avery Dennison trading at US$165.53 alongside an indicated discount to some valuation estimates, the key question is whether the current price still undervalues its prospects or if the market is already pricing in future growth.

Most Popular Narrative: 19.3% Undervalued

Against the last close of $165.53, the most followed narrative points to a fair value of $205, using a 7.22% discount rate and detailed long term assumptions.

The accelerating global adoption of smart labels, RFID, and traceable technologies, seen in robust growth in food and logistics (mid-teens growth) and ongoing program rollouts (e.g. Kroger and new pilots), positions Avery Dennison for sustained revenue expansion as more end markets digitize their supply chains and inventory management.

Curious what kind of earnings profile and margin path are being mapped out to support that fair value, and what future multiple the narrative assumes.

Result: Fair Value of $205 (UNDERVALUED)

However, you also need to weigh risks such as prolonged softness in apparel and retail demand, as well as rising competition in smart labels, which could challenge this upside story.

Another Angle On Valuation

The earlier narrative points to Avery Dennison trading at a 19.3% discount to a fair value of $205. However, the current P/E of 18.4x is higher than the global packaging industry at 15.6x and below a fair ratio of 20.1x. This raises the question of whether the stock offers a margin of safety or presents a valuation trap waiting to be tested.

Next Steps

The mix of upside potential and flagged concerns is clear. Treat this as a prompt to review the numbers yourself, compare scenarios, and then weigh the 4 key rewards and 1 important warning sign

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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.