Report: Thursday, July 30, 2026, before the market opens
Conference call: 11:00 a.m. ET
Closing price on July 29: $166.42
Avery Dennison enters Q2 with a relatively modest earnings hurdle but several important moving pieces beneath the headline numbers. The company guided adjusted EPS to $2.43–$2.53, while current consensus is approximately $2.46–$2.47. Revenue consensus is about $2.30 billion, near the upper end of the range implied by management’s 2%–4% reported-sales growth outlook. (marketbeat.com)
The quarter itself will test whether Avery successfully managed three expected pressures:
The more consequential issue for the stock will probably be management’s confidence in sequential earnings improvement during the second half, supported by pricing, restructuring savings, recovery in high-value Materials categories, and the ramp of new Intelligent Labels programs.
| Metric | Q2 2026 expectation | Q2 2025 actual | Commentary |
|---|---|---|---|
| Adjusted EPS | ~$2.46–$2.47 consensus | $2.42 | Company guidance: $2.43–$2.53 |
| Reported EPS | $2.21–$2.31 company guidance | $2.41 | Includes roughly $0.22 of expected restructuring and other items |
| Revenue | ~$2.30B consensus | $2.22B | Company outlook implies approximately $2.26B–$2.31B |
| Reported sales growth | 2%–4% | (0.7)% | Includes roughly 1 point each from currency and acquisition |
| Organic sales growth | 0%–2% | (1.0)% | Destocking is the principal expected volume headwind |
| Q3 adjusted EPS consensus | ~$2.51 | $2.37 | Important benchmark for management’s second-half commentary |
| FY2026 adjusted EPS consensus | ~$10.00 | $9.53 | Implies approximately 5% growth |
Consensus sources differ slightly, with estimates clustering around $2.46–$2.47 of Q2 adjusted EPS. (marketbeat.com)
Q1 benefited from customers purchasing ahead of announced price increases. Management estimated this added roughly $0.05 to Q1 EPS, but explained that the unwind creates an approximately $0.10 sequential swing between Q1 and Q2.
At the April call, Avery expected the elevated ordering to persist into April and largely unwind during the second half of Q2. The critical questions are:
A result within guidance despite heavier-than-expected destocking would indicate that productivity and pricing are working. Conversely, a weak quarter accompanied by continued July destocking would put management’s sequential-growth thesis at risk.
Raw-material conditions changed quickly during Q1. Avery moved from year-over-year deflation early in the period to inflation by March and forecast high-single-digit sequential raw-material inflation in Q2.
Management responded with price increases across regions, including second-round actions in some markets. It expected a low- to mid-single-digit sequential pricing benefit and described the Q2 price/cost lag as relatively small.
Investors should focus on:
Avery has historically been effective at recovering inflation, so a significant or widening price/cost gap would be a notable disappointment.
Materials Group was the strongest part of Q1:
The base-label result was helped by prebuying, however, while Graphics and Reflectives declined mid-single digits and Performance Materials declined low single digits. Management expected those high-value categories to return to growth as the year progressed.
Q2 therefore needs to demonstrate more than headline Materials growth. The ideal composition would be:
If Materials earnings hold up only because of pricing while underlying volumes weaken broadly, the quality of the result will be less encouraging.
Enterprise-wide Intelligent Labels generated approximately $0.9 billion of sales in 2025, making it one of Avery’s central long-term growth platforms. But Q1 sales declined low single digits:
Management continued to expect 2026 Intelligent Labels growth to exceed 2025, but that requires a substantially stronger second half. The main catalysts are:
The food rollout is particularly important. Management previously described its expected value over two years as equivalent to a high-single-digit to low-double-digit percentage of 2025 Intelligent Labels revenue.
Investors should look for concrete milestones rather than broad optimism:
A vague or delayed update would make the full-year Intelligent Labels growth objective harder to underwrite.
Solutions Group was the weak spot in Q1:
Productivity and favorable price/cost were insufficient to offset employee costs, lower base volumes, and growth investments. Q2 comparisons are somewhat easier in apparel, but the segment still needs better volume and mix to improve profitability.
A constructive report would show Solutions EBITDA margin stabilizing or improving from Q1 while Avery continues funding future growth. Another sizable year-over-year decline—especially without stronger Intelligent Labels growth—would raise questions about the timing of returns on those investments.
Avery has not provided conventional full-year EPS guidance, but management laid out several factors supporting sequential earnings improvement:
Offsets include the normalization of unusually low 2025 incentive compensation and continued growth investments.
Current consensus calls for approximately $10.00 of FY2026 adjusted EPS. Assuming Q2 lands near $2.47, that requires roughly $5.06 across Q3 and Q4, versus $4.84 in the comparable 2025 period. This is achievable if management’s expected second-half drivers materialize, but it leaves limited room for a delayed Intelligent Labels ramp or persistent volume weakness.
Q1 adjusted free cash flow was unusually strong at $104 million, versus negative $53 million in the prior-year quarter, largely because of better working capital. Avery retained a reasonably strong balance sheet with net debt at 2.4 times adjusted EBITDA.
The company returned $133 million to shareholders in Q1, including $61 million of repurchases. Management also said April repurchase activity continued at a similar pace to March, although its return-based framework means the pace can vary with the share price.
For Q2, investors should monitor:
AVY closed July 29 at $166.42, roughly:
That valuation and share-price performance suggest expectations are not especially demanding. However, the market is already positioned for Q2 EPS near the midpoint of guidance. A routine EPS beat driven by taxes or share count may not be enough if underlying volumes, Solutions margins, or second-half commentary disappoint.
The Q2 headline hurdle is manageable: consensus sits near the midpoint of Avery’s own EPS range, and the stock has already de-rated. The real test is whether the company can show that Q2 represents the trough in its 2026 earnings cadence.
The best evidence would be completed label-materials destocking, disciplined price/cost execution, improving high-value Materials demand, and specific confirmation that Intelligent Labels programs are entering their promised second-half ramp. If those pieces are intact, the current valuation could look attractive. If they slip, the approximately $10 full-year consensus and the expected 2027 acceleration will become more difficult to defend.