I'll research Avery Dennison (AVY) before writing the preview. Let me gather recent earnings materials, filings, and news.Interesting — this environment has data through mid-2026. Let me read the most recent quarter's materials (2026Q1, reported April 2026) and get recent news.Let me get recent news, stock price trend, and the Q1 2026 presentation for guidance details.The stock has notably underperformed. Let me read the Q1 2026 presentation for the full-year framework and check the Q2 2025 release for the prior-year comparison base.I now have what I need. Let me compile a few key figures before writing.Here is the earnings preview.
Report date: Thursday, July 30, 2026 (before open) • Quarter ended: ~June 30, 2026 • Call: 2026Q2 Earnings Call
AVY heads into its Q2 print as a "self-help" story fighting a two-front battle: a fresh raw-material inflation spike it's trying to out-price, and a Q1 label-materials pre-buy that management expects to unwind ("de-stock") in the back half of Q2. The bar is low — management's own guide calls for only ~3% EPS growth — but the setup around the number is unusually noisy, and the stock has ripped ~9% into the print (from ~$155 on 7/23 to ~$167 on 7/29), so expectations have quietly firmed up.
On the April 28 Q1 call, AVY laid out a specific Q2 frame:
| Metric | Q2 2026 Guide | Q2 2025 Actual | Implied YoY |
|---|---|---|---|
| Adjusted EPS | $2.43 – $2.53 (mid $2.48) | $2.42 | ~+2.5% at midpoint |
| Reported sales growth | +2% to +4% | — | incl. ~1% FX + ~1% Taylor Adhesives M&A |
| Organic sales growth | 0% to +2% | (1.0%) | inflection back to flat/positive |
| Reported EPS | $2.21 – $2.31 | $2.41 | ~$0.22 restructuring/other items add-back |
The midpoint ($2.48) is the number to watch. Note the sequential lack of a step-up: Q2 is normally seasonally stronger than Q1 ($2.47), but the guide is essentially flat sequentially because the ~$0.05 Q1 pre-buy tailwind reverses, creating a ~$0.10 headwind that offsets the usual $0.10–$0.15 seasonal benefit. First-half midpoint math works out to ~$4.95 vs. $4.72 a year ago (~+5%).
1) The pre-buy unwind — is it orderly? This is the single biggest swing factor. Customers pulled forward label-material purchases in March (ahead of price increases), which persisted into April and juiced Q1 by ~$0.05. Management said this volume should "largely unwind during the second half of Q2." Watch whether (a) the de-stock landed within Q2 as expected or spills into Q3, and (b) whether it was a modest "month or so of inventory" as management framed it — versus the multi-quarter 2021–22 style build that ended in a painful destock. Any signal that the unwind is bigger/messier than a "$0.05 give-back" is the key downside risk to the quarter and to Q3 guidance.
2) Price/cost — can they keep pace with a re-accelerating inflation spike? Deflation flipped to inflation during March, driven by petrochemical-linked commodities. Management guided to high-single-digit sequential raw-material inflation in Q2 and said inflation was still rising into late April/early May, prompting a second round of pricing actions. They expect a slight net price/cost headwind in Q2 (timing lag) and some carryover inflation into Q3. AVY's whole bull thesis rests on its claim that it can now offset inflation with "no real gap" in timing — a departure from the historical one-quarter lag. This print is the first real test. Watch Materials Group EBITDA margin (17.8% in Q1, +10bps YoY) as the scorecard.
3) Intelligent Labels — everything is riding on the 2H ramp. IL was a disappointment in Q1 (organic sales down low-single-digits, below plan), a "tale of two markets": - Apparel/general retail (the largest category): up LSD despite a tough pre-tariff comp — encouraging. - Logistics: down low-double-digits on soft end-customer demand + an inventory drawdown ahead of a customer chip transition. AVY is also lapping outsized 2025 share it won when competitors couldn't supply — a give-back that hadn't shown up yet in Q1 and could bite in Q2/2H.
Management reiterated full-year IL growth will exceed 2025, but it's heavily 2H-weighted, anchored by the Walmart food rollout (bakery/meat/deli), sized at high-single to low-double-digit % of total 2025 IL revenue over a two-year period. Key questions for the call: Did apparel comps ease as expected (tariffs hit Q2 2025)? Any read on Walmart rollout timing/pilots? And how big is the logistics share give-back?
4) Solutions Group margin — the soft spot. Solutions was the weak segment in Q1: organic sales down 0.9%, adjusted EBITDA margin 16.4%, down 80bps YoY, as productivity and net pricing were more than offset by higher employee costs, weak base-category (apparel) volumes, and growth investments. Watch whether apparel base volumes stabilize and whether margin decline narrows. Vestcom and Embelex (mid-single-digit growth, aided by World Cup) are the bright spots here.
5) Materials high-value categories — return to growth? Graphics & Reflectives (down MSD) and Performance Materials/Tapes (down LSD) dragged in Q1 on tough comps, distributor inventory timing, and soft auto end-markets. Management insists these return to growth through the year. A Q2 inflection would validate the "idiosyncratic, not structural" framing.
Bullish tells: EPS at/above the $2.53 high end; organic sales positive (toward +2%); Materials margin holding/expanding despite inflation; Solutions margin decline narrowing; constructive/quantified color on the Walmart food ramp and apparel comp recovery; de-stock confirmed as contained; possibly a raised restructuring number again.
Bearish tells: EPS at/below the low end or a cut/soft Q3 guide; evidence the pre-buy unwind is larger/spilling into Q3; price/cost lag widening as inflation keeps rising; the logistics share give-back accelerating; IL "2H ramp" pushed out or hedged; continued Solutions margin erosion.
Bottom line: The reported number will likely land near the ~$2.48 midpoint, so the read-through lives in the qualitative guide — specifically the size/timing of the de-stock, whether price is genuinely keeping pace with re-accelerating inflation, and whether management sounds confident enough on the 2H Intelligent Labels (Walmart) ramp to keep the full-year "growth above 2025" claim intact. After a 9% run into the print, the risk skews toward needing a clean beat and a confident 2H message to hold the move.
(Prepared from AVY's Q1 2026 earnings call and presentation, the Q2 2025 earnings release, and recent price data. This is an informational preview, not investment advice.)