Event: Avery Dennison reports second-quarter 2026 results before market open on Thursday, July 30, 2026, with its earnings call at 11:00 a.m. ET. (investors.averydennison.com)
AVY enters earnings with a relatively modest near-term earnings bar, but a meaningful execution debate. Management’s 2Q outlook calls for adjusted EPS of $2.43–$2.53, while the current published consensus is approximately $2.47—essentially the midpoint of guidance. The more important determinant of the stock reaction is likely to be whether management can validate its expected second-half acceleration in Intelligent Labels, high-value materials and productivity savings while containing the impact of second-quarter destocking and raw-material inflation. (investors.averydennison.com)
At the July 29 close of $166.39, AVY was down roughly 8.5% year to date and about 15.5% below its February 20, 2026 closing high of $196.92. That price performance suggests investors already recognize the cyclical risks around apparel, logistics and inflation; however, it also leaves little room for a weak outlook on the company’s higher-value growth platforms.
| Metric | 2Q26 setup |
|---|---|
| Company adjusted EPS guide | $2.43–$2.53 |
| Published EPS consensus | $2.47 |
| 2Q25 adjusted EPS | $2.42 |
| Implied consensus EPS growth | ~2% YoY |
| Company organic-sales guide | 0%–2% YoY |
| Company reported-sales guide | 2%–4% YoY |
| 2Q25 sales base | $2.22 billion |
| Implied 2Q26 reported-sales range | ~$2.27–$2.31 billion |
Management’s EPS range implies only modest year-over-year growth versus the $2.42 adjusted EPS earned in 2Q25. The sales guide assumes 0%–2% organic growth, supplemented by roughly one point each from currency and the Taylor Adhesives acquisition. (investors.averydennison.com)
Materials was the stabilizer in 1Q: organic sales rose 1.9%, supported by mid-single-digit volume/mix growth in base categories. But management also identified customer purchasing ahead of price increases—particularly in March and April—and expected that inventory build to unwind in the latter half of 2Q. (investors.averydennison.com)
For 2Q, investors should distinguish between:
A manageable unwind paired with stable base-category demand would support the view that 2Q is a timing trough rather than the beginning of a broader volume downturn.
At the April earnings call, AVY described a sharp shift from raw-material deflation to inflation, expecting high-single-digit sequential inflation in 2Q. Management said it was implementing global pricing actions, including additional rounds in certain regions, and expected pricing to largely keep pace—albeit with some timing friction.
The key questions are therefore:
This is particularly important because 1Q margins were protected through productivity and price/cost actions despite unfavorable mix and higher employee-related costs. (investors.averydennison.com)
Solutions remains the weaker segment. In 1Q, organic sales fell 0.9% and adjusted EBITDA margin fell 80 basis points to 16.4%, as higher employee costs, lower base-business volumes and growth investments outweighed productivity and favorable net price/cost. Intelligent Labels declined low-single digits, while the base business fell mid-single digits. (investors.averydennison.com)
The earnings call needs to establish whether:
The comparison is relevant because 2Q25 was already soft: company organic sales declined 0.8% in Solutions, with apparel down mid-single digits. (investors.averydennison.com)
Intelligent Labels is likely the highest-value topic on the call.
In 1Q, the platform declined low-single digits, with encouraging apparel/general-retail growth offset by weakness in logistics. Management attributed much of the logistics softness to customer demand and inventory management around a chip transition. It also maintained that full-year Intelligent Labels growth would exceed 2025, with growth increasingly weighted to the second half.
The principal second-half catalysts outlined by management were:
For 2Q, investors should focus less on whether Intelligent Labels posts a large headline growth number and more on whether the company confirms:
A confirmation of the back-half ramp would reinforce AVY’s long-term mix-up narrative. Any deferral in food, retail or logistics deployments would be a more material concern than a small 2Q EPS miss.
Management increased its expected 2026 restructuring savings to more than $55 million, with a substantial portion of the benefit expected in the second half. It also targeted approximately 100% adjusted free-cash-flow conversion for the year, with fixed and IT capital spending of roughly $260 million. These are important supports if top-line conditions remain only modest.
AVY began the year with a solid balance sheet: net debt to adjusted EBITDA was 2.4x at the end of 1Q. It returned $133 million to shareholders during the quarter through dividends and buybacks, and raised its quarterly dividend to $1.00 in April. (investors.averydennison.com)
The June appointment of Danny Allouche as President of Materials Group is also worth noting. While it is not likely to be a near-term financial driver, investors may listen for continuity in the Materials growth, pricing and high-value-category strategy. (investors.averydennison.com)
AVY delivers EPS above the midpoint or near the top end of guidance, characterizes destocking as limited and temporary, demonstrates price/cost neutrality, and confirms a visible second-half Intelligent Labels ramp. This would strengthen confidence that the current quarter is the low point in the year’s earnings cadence.
Results land near the $2.47–$2.50 range, organic growth is modest, Materials absorbs the prebuy unwind as expected, and management reiterates a sequentially improving second half. This outcome likely keeps attention on execution rather than creating a major fundamental reset.
Results trend toward the low end of guidance due to a larger-than-expected volume unwind or price/cost lag, while management becomes less definitive on food-rollout timing, logistics normalization or the second-half Intelligent Labels inflection. A weak Solutions-margin outlook would compound the downside risk.
AVY’s 2Q26 report is primarily a credibility test for the second-half acceleration thesis. The near-term EPS hurdle is manageable, but investors need confirmation that temporary 2Q issues—prebuy destocking, inflation timing and logistics softness—are not evolving into a broader demand problem. The highest-quality outcome would pair in-line-to-better EPS with stable Materials margins, clear price/cost control and specific evidence that Intelligent Labels growth is set to accelerate in the back half of 2026.