Stock Analysis & Valuation Avery Dennison Corporation (0HJR.L)

• Previous Close: £184.40
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)	79.76	-57
Graham-Dodd Method		n/a
Graham Formula	33.80	-82

Strategic Investment Analysis

Company Overview

Avery Dennison Corporation (LSE: 0HJR.L) is a global leader in pressure-sensitive materials and labeling solutions, serving diverse industries such as packaging, retail branding, and industrial applications. Headquartered in Glendale, California, the company operates across the U.S., Europe, Asia, and Latin America, offering innovative products under well-known brands like Fasson, JAC, and Mactac. Avery Dennison specializes in label and graphic materials, RFID solutions, sustainable packaging, and industrial adhesives, catering to sectors including food and beverage, pharmaceuticals, automotive, and retail. With a strong focus on sustainability and digital transformation, the company provides high-performance solutions that enhance brand visibility, supply chain efficiency, and product security. Avery Dennison’s extensive portfolio and global footprint position it as a key player in the consumer cyclical sector, particularly in packaging and labeling.

Investment Summary

Avery Dennison presents a stable investment opportunity with a market capitalization of $13.87 billion and a beta of 0.887, indicating lower volatility compared to the broader market. The company reported $8.76 billion in revenue and $704.9 million in net income for the latest fiscal year, with a diluted EPS of $8.73. Operating cash flow stands at $938.8 million, supporting its $3.52 per share dividend. However, investors should note the company’s total debt of $3.15 billion, which could pose risks in a rising interest rate environment. Avery Dennison’s diversified product portfolio and strong industry positioning mitigate some risks, but competition and raw material cost fluctuations remain challenges.

Competitive Analysis

Avery Dennison holds a competitive edge through its extensive product portfolio, strong brand recognition, and global distribution network. The company’s focus on RFID technology and sustainable packaging solutions differentiates it from competitors, aligning with growing industry trends toward digitalization and eco-friendly materials. Its Label and Graphic Materials segment dominates the pressure-sensitive labeling market, while the Retail Branding segment benefits from long-term contracts with major retailers. However, the company faces stiff competition from larger packaging firms and regional players offering lower-cost alternatives. Avery Dennison’s innovation pipeline and strategic acquisitions (e.g., RFID and smart label expansions) help maintain its leadership, but pricing pressures in commoditized segments could impact margins. Its Industrial and Healthcare segment also competes with specialized adhesive manufacturers, requiring continuous R&D investment to sustain growth.

Major Competitors

• Amcor plc (AMCR): Amcor is a global packaging giant with a broader product range, including flexible and rigid packaging, giving it scale advantages over Avery Dennison. However, Amcor lacks Avery’s strong focus on RFID and smart labeling, which are growth drivers. Amcor’s larger debt load could also limit flexibility compared to Avery’s more balanced capital structure.
• Ball Corporation (BLL): Ball Corporation specializes in metal packaging (e.g., beverage cans), a market Avery does not serve directly. Ball’s sustainability focus (recyclable aluminum) competes with Avery’s eco-friendly labels, but the two companies operate in largely complementary segments. Ball’s higher exposure to commodity prices is a key difference.
• Crown Holdings, Inc. (CCK): Crown Holdings is a leader in metal packaging, similar to Ball, and does not overlap significantly with Avery’s core labeling business. Crown’s international presence rivals Avery’s, but its product mix is less diversified, making it more vulnerable to sector-specific downturns.
• Sealed Air Corporation (SEE): Sealed Air focuses on protective packaging (e.g., Bubble Wrap) and food packaging, areas where Avery has limited presence. Sealed Air’s innovation in sustainable materials competes indirectly with Avery’s eco-labeling solutions, but the two companies target different customer needs.
• UPM-Kymmene Oyj (UPM.HE): UPM is a paper and forest products company with a growing labeling division, competing directly with Avery’s pressure-sensitive materials. UPM’s vertical integration (pulp production) gives it cost advantages, but Avery’s stronger branding and RFID capabilities provide differentiation.