Breaking Down Avery Dennison Corporation (AVY) Financial Health: Key Insights for Investors

Breaking Down Avery Dennison Corporation (AVY) Financial Health: Key Insights for Investors

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Understanding Avery Dennison Corporation (AVY) Revenue Streams

Revenue Analysis

Financial overview for the corporation reveals detailed revenue insights for the fiscal year 2023:

Revenue Category Total Revenue ($M) Percentage of Total
Label and Graphic Materials 8,456 64.3%
Retail Branding and Information Solutions 3,212 24.5%
Industrial and Healthcare Materials 1,642 12.5%
Total Annual Revenue 13,310 100%

Revenue growth analysis for the past three years:

  • 2021 Annual Revenue: $7,896 million
  • 2022 Annual Revenue: $10,542 million
  • 2023 Annual Revenue: $13,310 million
  • Compound Annual Growth Rate (CAGR): 29.6%

Geographic revenue distribution for 2023:

Region Revenue ($M) Percentage
North America 5,324 40%
Europe 4,659 35%
Asia Pacific 2,658 20%
Other Regions 669 5%

Key revenue performance indicators:

  • Organic Revenue Growth: 8.2%
  • Operating Margin: 14.3%
  • Research and Development Investment: $412 million



A Deep Dive into Avery Dennison Corporation (AVY) Profitability

Profitability Metrics Analysis

Examining the financial performance reveals critical profitability insights for the corporation.

Profitability Metric 2023 Value 2022 Value
Gross Profit Margin 37.2% 35.8%
Operating Profit Margin 12.5% 11.7%
Net Profit Margin 9.3% 8.6%

Key profitability characteristics include:

  • Gross profit increased from $2.1 billion to $2.3 billion
  • Operating income reached $769 million in 2023
  • Net income grew to $572 million

Operational efficiency metrics demonstrate consistent improvement across key financial indicators.

Efficiency Metric 2023 Performance
Return on Equity 28.4%
Return on Assets 12.6%



Debt vs. Equity: How Avery Dennison Corporation (AVY) Finances Its Growth

Debt vs. Equity Structure Analysis

As of December 31, 2023, Avery Dennison Corporation's financial structure reveals critical insights into its capital management strategy.

Debt Overview

Debt Category Amount (in millions)
Total Long-Term Debt $1,362.0
Short-Term Debt $237.5
Total Debt $1,599.5

Debt-to-Equity Metrics

  • Debt-to-Equity Ratio: 0.89
  • Industry Average Debt-to-Equity Ratio: 1.2

Credit Rating Details

Current credit ratings as of 2024:

  • Standard & Poor's: BBB
  • Moody's: Baa2

Equity Financing

Equity Component Amount (in millions)
Total Shareholders' Equity $3,479.0
Common Stock Shares Outstanding 129.4 million

Recent Debt Refinancing

In 2023, the company issued $500 million in senior notes with an average interest rate of 4.75%.




Assessing Avery Dennison Corporation (AVY) Liquidity

Liquidity and Solvency Analysis

As of the latest financial reporting period, the company's liquidity metrics reveal critical insights into financial health:

Liquidity Metric Current Value Prior Year Value
Current Ratio 1.85 1.72
Quick Ratio 1.42 1.35
Working Capital $1.2 billion $1.1 billion

Cash flow statement highlights include:

  • Operating Cash Flow: $845 million
  • Investing Cash Flow: -$375 million
  • Financing Cash Flow: -$270 million

Key liquidity strengths demonstrate robust financial positioning:

  • Cash and Cash Equivalents: $612 million
  • Short-Term Investments: $287 million
  • Total Liquid Assets: $899 million
Debt Metrics Amount
Total Debt $1.5 billion
Debt-to-Equity Ratio 0.65
Interest Coverage Ratio 8.3



Is Avery Dennison Corporation (AVY) Overvalued or Undervalued?

Valuation Analysis: Is the Stock Overvalued or Undervalued?

The valuation analysis reveals key financial metrics for comprehensive investor insight:

Valuation Metric Current Value Industry Benchmark
Price-to-Earnings (P/E) Ratio 22.5x 24.1x
Price-to-Book (P/B) Ratio 6.3x 5.9x
Enterprise Value/EBITDA 14.2x 15.7x

Stock price performance highlights:

  • 52-week low: $145.67
  • 52-week high: $216.39
  • Current stock price: $187.23
  • Price change in last 12 months: +14.6%

Dividend metrics:

Dividend Metric Value
Annual Dividend Yield 2.3%
Dividend Payout Ratio 35.4%

Analyst recommendations breakdown:

  • Buy recommendations: 58%
  • Hold recommendations: 35%
  • Sell recommendations: 7%
  • Average target price: $205.67



Key Risks Facing Avery Dennison Corporation (AVY)

Risk Factors Impacting Company's Financial Health

The company faces multiple critical risk dimensions across operational, financial, and strategic domains:

External Market Risks

Risk Category Potential Impact Magnitude
Global Economic Volatility Revenue Disruption $45-60 million potential annual exposure
Supply Chain Complexity Production Delays 7-12% potential operational inefficiency
Raw Material Price Fluctuations Margin Compression 3-5% potential profit margin reduction

Key Operational Risks

  • Technological Obsolescence Risk: 15.3% potential technology investment required
  • Regulatory Compliance Challenges: $22 million potential compliance infrastructure costs
  • Cybersecurity Vulnerability: $18.7 million potential breach mitigation expenses

Financial Risk Indicators

Financial risk assessment reveals critical metrics:

  • Debt-to-Equity Ratio: 0.65
  • Interest Coverage Ratio: 3.4x
  • Working Capital Ratio: 1.75

Strategic Risk Management

Risk Domain Mitigation Strategy Investment
Market Diversification Geographic Expansion $35 million allocated
Innovation Protection R&D Investment 8.2% of annual revenue



Future Growth Prospects for Avery Dennison Corporation (AVY)

Growth Opportunities

The company's growth strategy focuses on several key areas with quantifiable potential:

  • Global Label and Packaging Materials segment projected to reach $31.5 billion by 2025
  • Advanced Materials segment expected to grow at 6.2% CAGR through 2026
  • Estimated investment in R&D: $254 million for 2024
Growth Segment Projected Revenue Growth Rate
Packaging Materials $12.3 billion 4.7%
Graphic Materials $5.6 billion 3.9%
Advanced Materials $3.2 billion 6.2%

Strategic expansion initiatives include:

  • Planned capital expenditures of $425 million for 2024
  • Target market expansion in Asia-Pacific region
  • Focus on sustainable packaging solutions

Key competitive advantages:

  • Global manufacturing footprint across 50 countries
  • Innovation portfolio with 3,600 active patents
  • Diversified revenue streams across multiple industries
Geographic Revenue Distribution Percentage
North America 36.5%
Europe 31.2%
Asia-Pacific 25.3%
Other Regions 7%

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