Value
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 6.2 |
| P/S | 9.3 |
| EV/EBITDA | 4.7 |
| Fwd P/E | 7.2 |
| PEG | 3.4 |
| Analyst target | 4.0 |
- ▸Forward P/E: 17.4x
- ▸PEG: 3.48
AVY · Why this verdict
Why Avery Dennison (AVY) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.4/10
ConfidenceHIGH
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Avery Dennison earns an excellent 31% ROE with 131% cash conversion and a 2.2% dividend yield, but growth is modest and the price of $182.22 sits 3.2% above the $176.35 analyst target. Overbought momentum (RSI 77) and no moat make the setup unattractive for new money.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company is a dividend aristocrat with a 2.2% yield and a dividend-safety component of 8.0/10, supporting a steady income stream. Catalyst breakdown | The dividend should continue to rise annually with payout covered by free cash flow. | ↑Improving |
| CounterA 2.2% yield is modest and a dividend record does not protect against a 9.9% price decline to the stop. | ||
Avery Dennison delivers an excellent ROE of 31% and cash conversion of 131% FCF/NI, with quality ranking well above peers on returns. Quality breakdown | ROE should stay above 25% and free cash flow should remain above net income over 12 months. | →Stable |
| CounterThe business has no competitive moat, gross margin scores only 1.8/10, and a high ROE can be inflated by leverage. | ||
The price of $182.22 is 3.2% above the $176.35 analyst target, with 9.9% downside to the stop, a negative reward-to-risk of -0.32. Estimated upside | Analyst targets should be raised toward the price, or the price should ease back toward the target. | →Stable |
| CounterPositive momentum and favorable analyst commentary could prompt target increases that justify the current price. | ||
RSI is overbought at 77 while the 200-day average slope is flat or negative, a late-cycle distribution risk, even though volume shows accumulation. Momentum breakdown | RSI should cool below 65 without breaking below the 200-day average. | ↑Improving |
| CounterMACD and on-balance volume both score the maximum 10, showing broad strength that could extend the rally. | ||
69.0% of operations are outside the U.S. and the consumer cyclical sector carries a -1.5 modifier, with growth scores of only 3.4/10. Bear case | Revenue growth should improve above 5% YoY as demand recovers. | ↓Deteriorating |
| CounterHeavy international exposure adds currency and trade risk, and low growth makes a forward P/E of 16.4x look full. | ||
The company is a dividend aristocrat with a 2.2% yield and a dividend-safety component of 8.0/10, supporting a steady income stream.
↑ImprovingCatalyst breakdown
- Expectation
- The dividend should continue to rise annually with payout covered by free cash flow.
CounterA 2.2% yield is modest and a dividend record does not protect against a 9.9% price decline to the stop.
Avery Dennison delivers an excellent ROE of 31% and cash conversion of 131% FCF/NI, with quality ranking well above peers on returns.
→StableQuality breakdown
- Expectation
- ROE should stay above 25% and free cash flow should remain above net income over 12 months.
CounterThe business has no competitive moat, gross margin scores only 1.8/10, and a high ROE can be inflated by leverage.
The price of $182.22 is 3.2% above the $176.35 analyst target, with 9.9% downside to the stop, a negative reward-to-risk of -0.32.
→StableEstimated upside
- Expectation
- Analyst targets should be raised toward the price, or the price should ease back toward the target.
CounterPositive momentum and favorable analyst commentary could prompt target increases that justify the current price.
RSI is overbought at 77 while the 200-day average slope is flat or negative, a late-cycle distribution risk, even though volume shows accumulation.
↑ImprovingMomentum breakdown
- Expectation
- RSI should cool below 65 without breaking below the 200-day average.
CounterMACD and on-balance volume both score the maximum 10, showing broad strength that could extend the rally.
69.0% of operations are outside the U.S. and the consumer cyclical sector carries a -1.5 modifier, with growth scores of only 3.4/10.
↓DeterioratingBear case
- Expectation
- Revenue growth should improve above 5% YoY as demand recovers.
CounterHeavy international exposure adds currency and trade risk, and low growth makes a forward P/E of 16.4x look full.
Per-dimension breakdown
Quality
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 5.5 |
| Gross margin | 1.8 |
| Op margin | 4.8 |
| Net margin | 3.8 |
| Current ratio | 4.5 |
| FCF quality | 9.4 |
| Moat | 5.4 |
| Piotroski F | 6.7 |
- ▸Excellent ROE: 31%
- ▸Excellent cash conversion: 131% FCF/NI
- ▸No competitive moat
Growth
3.4/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.8 |
| EPS growth | 3.0 |
Momentum
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.2 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 7.5 |
| Volume | 3.7 |
- ▸Overbought (RSI 76)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat/negative + RSI 76 (late-cycle distribution risk)
Sentiment
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.0 |
| Price target | 5.8 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (10.0) — signal dampened
Insider
5.5/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.9 |
- ▸Negligible insider selling — $663,264 (0.005% of mkt cap)
Peer rank
5.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.8 |
| quality rank | 8.1 |
| growth rank | 5.6 |
- ▸Superior ROE vs peers
Technical
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.6 |
| 52w position | 9.6 |
| gap | 5.0 |
Risk (lower is worse)
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.3 |
| days to cover | 7.9 |
| volatility | 6.6 |
| put call | 0.0 |
| implied vol | 6.6 |
| max pain risk | 3.0 |
| beta | 8.3 |
| debt equity | 4.0 |
- ▸Elevated put/call: 2.29
- ▸Above max pain $150
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 5.7 |
| dividend safety | 8.0 |
- ▸Perfect beat streak: 4Q
- ▸Dividend aristocrat: 2.1% yield
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:7.1>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:90d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.6=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.55
Upside
-8.2%
Downside
14.8%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 2.9 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Momentum at 7.1) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.6=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.55 — supplementary context, not the trigger for this path.
The strongest dimensions are Momentum at 7.1, Catalyst at 6.7, and Sentiment at 6.1; the weakest are Growth at 3.4, Technical at 3.8, and Peer rank at 5.1. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.55 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1High Returns Strong Cash Conversion
Trip ifROE falls below 20% from current 31%.
- P2Dividend Aristocrat Income
Trip ifFree cash flow to net income conversion falls below 90% from current 131%.
- P3Price Above Analyst Target
Trip ifUpside to the analyst target exceeds 12% from current -3.2%.
- P4Overbought Late Cycle Momentum
Trip ifPrice drops below the 200-day average while RSI falls below 50 from current 77.
- P5International Exposure Cyclical Sector
Trip ifInternational share of operations exceeds 75% from current 69.0%.