Avery Dennison’s third quarter results were met with a notably positive market response, reflecting both operational resilience and strategic execution. Management attributed the quarter’s performance to margin expansion in the Materials Group, continued growth in high-value categories like specialty durable labels, and sequential improvement in apparel volumes. CEO Dion Stander highlighted, “We fully mitigated direct cost increases through strategic sourcing adjustments and select pricing surcharges.” Despite some ongoing headwinds from customer inventory adjustments and trade policy changes, the company’s diversified product mix and operational discipline helped sustain profitability this quarter.
Is now the time to buy AVY? Find out in our full research report (it’s free for active Edge members).
Avery Dennison (AVY) Q3 CY2025 Highlights:
- Revenue: $2.22 billion vs analyst estimates of $2.22 billion (1.5% year-on-year growth, in line)
- Adjusted EPS: $2.37 vs analyst estimates of $2.33 (1.9% beat)
- Adjusted EBITDA: $365.1 million vs analyst estimates of $355.5 million (16.5% margin, 2.7% beat)
- Adjusted EPS guidance for Q4 CY2025 is $2.40 at the midpoint, below analyst estimates of $2.45
- Operating Margin: 11.9%, in line with the same quarter last year
- Organic Revenue was flat year on year vs analyst estimates of flat growth (67.4 basis point miss)
- Market Capitalization: $13.97 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 Q3 Earnings Call
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Ghansham Panjabi (R.W. Baird) asked about sequential volume trends in Materials, noting ongoing macro uncertainty. CEO Dion Stander explained that volumes remained positive overall but were softer than expected, particularly due to muted consumer demand and cautious emerging market activity amid tariffs.
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George Staphos (Bank of America) inquired about the Walmart intelligent label opportunity and its scale. Stander described it as both a critical validation and a catalyst for broader food segment growth, estimating it could drive high single-digit to low double-digit revenue growth in intelligent labels over two years.
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John McNulty (BMO Capital Markets) questioned the intelligent label pipeline and potential capacity constraints. Stander reported growing opportunities across all segments and explained that current infrastructure is sufficient, with modular investments planned as demand ramps.
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Jeff Zekauskas (JPMorgan) asked if the technology used in Walmart is unique or could be leveraged elsewhere. Stander confirmed key innovations in sensors and adhesives but emphasized the technology is adaptable and not exclusive, supporting broader market expansion.
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Matthew Roberts (Raymond James) sought clarity on the timing and magnitude of intelligent label growth, especially the shift of program rollouts into future periods. Stander said most rollouts remain on track, but apparel and general retail are seeing muted volumes due to tariffs, with better visibility expected next year.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory analyst team will closely watch (1) the pace and scale of intelligent label adoption with major retailers such as Walmart and Kroger, (2) normalization of inventory management and recovery in high-value categories like graphics and performance tapes, and (3) the impact of ongoing trade policy developments on apparel and general retail. Progress in executing productivity initiatives and realizing cost synergies from acquisitions will also serve as important indicators of operational discipline.
Avery Dennison currently trades at $179.17, up from $163.44 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).
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