Avery Dennison delivered a positive first quarter, with management crediting strong performance in its Materials Group for offsetting softness in the Solutions Group. CEO Deon M. Stander highlighted that the Materials Group achieved mid single-digit growth in its base label categories, compensating for lower volumes in high value segments like Graphics and Reflectives. The company’s ability to manage raw material inflation—by implementing price increases and material reengineering—also supported profitability. Management noted that customer prebuying ahead of anticipated price hikes provided a temporary boost, particularly in March, but stressed that robust operational execution and cost control remain foundational to results.
Is now the time to buy AVY? Find out in our full research report (it’s free for active Edge members).
Avery Dennison (AVY) Q1 CY2026 Highlights:
- Revenue: $2.30 billion vs analyst estimates of $2.26 billion (7% year-on-year growth, 1.8% beat)
- Adjusted EPS: $2.47 vs analyst estimates of $2.43 (1.8% beat)
- Adjusted EBITDA: $376.5 million vs analyst estimates of $373.8 million (16.4% margin, 0.7% beat)
- Adjusted EPS guidance for Q2 CY2026 is $2.48 at the midpoint, below analyst estimates of $2.52
- Operating Margin: 11.8%, in line with the same quarter last year
- Organic Revenue rose 1.1% year on year (beat)
- Market Capitalization: $12.34 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 Q1 Earnings Call
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Ghansham Panjabi (Robert W. Baird) asked about Intelligent Labels’ performance versus expectations and growth prospects. CEO Deon M. Stander said Q1 was slightly below plan due to logistics softness but expects a ramp in the second half, citing new food and apparel programs.
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George Staphos (Bank of America Securities) requested detail on price/cost dynamics and high value category weakness. CFO Gregory S. Lovins explained price increases would offset most inflation with some lag, and high value Materials Group declines were due to tough comps and inventory trends.
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Jeffrey John Zekauskas (JPMorgan) questioned the lack of typical Q2 seasonality. Lovins attributed this to prebuying in Q1 creating a “$0.10 swing” and said sequential earnings growth should resume as headwinds subside and productivity gains take hold.
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John McNulty (BMO Capital Markets) inquired about logistics headwinds in Intelligent Labels and the Williard investment. Stander clarified that logistics softness was mainly volume-driven, with chip transition impact temporary, and emphasized Williard expands condition-monitoring capabilities and long-term market opportunities.
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John Dunigan (Jefferies) sought clarity on Intelligent Labels growth cadence and headwinds from lapping 2025 share gains. Stander said the main driver for 2026 would be food sector rollouts, with apparel and logistics pilots also contributing to growth in the second half.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the pace and scale of the Intelligent Labels ramp in food and retail, (2) the ability to offset inflation and wage pressures through pricing and productivity, and (3) the recovery trajectory in high value categories within both Materials and Solutions Groups. Execution on the Williard partnership and progress in logistics pilots will also serve as key indicators of strategic momentum.
Avery Dennison currently trades at $160.47, down from $164.98 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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