A month has gone by since the last earnings report for Avery Dennison (AVY). Shares have lost about 2.2% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Avery Dennison due for a breakout? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for Avery Dennison Corporation before we dive into how investors and analysts have reacted as of late.
Avery Dennison Q2 Earnings Beat Estimates, Revenues Dip Y/Y
Avery Dennison delivered adjusted earnings of $2.42 per share in second-quarter 2025, beating the Zacks Consensus Estimate of $2.38. The bottom line was flat year over year.
Including one-time items, the company has reported earnings per share (EPS) of $2.41, up from $2.18 in the year-ago quarter.
Avery Dennison’s Revenues & Gross Profit Dip Y/Y in Q2
Total revenues dipped 0.7% year over year to $2.22 billion, marginally missing the Zacks Consensus Estimate of $2.23 billion.
Cost of sales in the quarter grew 0.6% year over year to $1.58 billion. The gross profit fell 3.6% year over year to $639 million.
Marketing, general and administrative expenses were $352 million compared with the $374 million incurred in the year-ago quarter. The adjusted operating profit was around $287 million compared with the prior-year quarter’s $289 million. The adjusted operating margin was 12.9% in the quarter, flat compared with the year-ago quarter.
AVY’s Q2 Segmental Highlights
Revenues in the Materials Group segment increased 0.2% year over year to $1.55 billion in the second quarter. The reported figure exceeded our estimate of $1.54 billion. On an organic basis, sales decreased 1%. We predicted organic sales to rise 2.3%. The segment’s adjusted operating profit dipped 0.8% year over year to $242.5 million.
Revenues in the Solutions Group were down 2.6% year over year to $670 million. We estimated revenues of $659 million for this segment. On an organic basis, sales fell 0.8%. Our model predicted a rise of 1.1%. The segment’s adjusted operating income decreased 4% year over year to $67 million.
Avery Dennison’s Cash & Debt Position
AVY returned $503 million in cash to its shareholders through share repurchases and dividend payments in the first half of 2025. The company repurchased 2 million shares throughout the first half.
Avery Dennison ended the quarter with cash and cash equivalents of $216 million compared with $209 million at the second-quarter 2024 end. The company’s long-term debt was $2.63 billion at the end of the quarter under review, up from $2.05 billion at the end of the second quarter of 2024.
AVY realized approximately $30 million in pre-tax savings from restructuring (net of transition costs) in the first six months of 2025.
AVY’s Guidance for Q3
The company expects adjusted EPS between $2.24 and $2.40 for third-quarter 2025.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Avery Dennison has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a score of C on the value side, putting it in the middle 20% for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Avery Dennison has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Avery Dennison Corporation (AVY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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