Value
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 6.9 |
| P/S | 9.4 |
| EV/EBITDA | 5.1 |
| Fwd P/E | 8.0 |
| PEG | 3.4 |
| Analyst target | 5.0 |
- ▸Forward P/E: 15.0x
- ▸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.
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VerdictSELL
Overall score5.3/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company has beaten consensus earnings estimates in each of the last four quarters—most recently by 1.8%—with an average beat of roughly 1.9%, suggesting management is consistently delivering ahead of what the street expects. Earnings | EPS beats continue in both of the next two reported quarters, sustaining the streak and supporting further upward estimate revision. | →Stable |
| CounterAverage surprise of roughly 1.9% is narrow; a single quarter of cost pressure or softer demand could break the streak, particularly given the international exposure that introduces currency and macro variability. | ||
Rising on-balance volume despite the stock trading below its 200-day moving average points to institutional accumulation ahead of a potential trend reversal, with MACD also recovering from a death cross. Momentum breakdown | Price reclaims the 200-day moving average within 12 months, with on-balance volume continuing to rise as accumulation translates into sustained price action. | →Stable |
| CounterThe moving average slope is still declining at roughly 1.1% per month; accumulation signals in a confirmed downtrend frequently precede a failed breakout rather than a sustained recovery. | ||
A debt-to-equity ratio of 1.6 has drawn a leverage penalty in the risk profile, limiting financial flexibility and increasing sensitivity to any softening in operating cash flows. Bear case | Debt-to-equity falls below 1.2 as free cash flow is applied to debt reduction over the next four quarters. | →Stable |
| CounterReturn on equity of 31%—superior to peers—suggests the company is generating strong returns on its leveraged capital base, implying the current structure may be economically rational rather than a vulnerability. | ||
With roughly 69% of revenue generated outside the United States, currency movements and regional economic volatility represent a structural risk that a domestic slowdown alone would not capture. Bear case | International revenue share falls below 65% as domestic growth accelerates, or foreign-currency-adjusted growth remains positive for 3 consecutive quarters. | →Stable |
| CounterHigh international exposure also provides geographic diversification; a weaker U.S. dollar would be a direct earnings tailwind for this revenue mix. | ||
At the current price, roughly 9% of headroom remains to the take-profit level with a risk/reward ratio of approximately 1.88 to 1, which clears the minimum asymmetry threshold for entry. Price targets | Price advances to the $174 take-profit level within 12 months as earnings delivery and improving sentiment close the gap. | →Stable |
| CounterAnalyst coverage is light at roughly 10 firms, dampening the signal behind the 25% analyst upside target; a rich multiple on soft growth could limit re-rating potential even if earnings hold. | ||
The company has beaten consensus earnings estimates in each of the last four quarters—most recently by 1.8%—with an average beat of roughly 1.9%, suggesting management is consistently delivering ahead of what the street expects.
→StableEarnings
- Expectation
- EPS beats continue in both of the next two reported quarters, sustaining the streak and supporting further upward estimate revision.
CounterAverage surprise of roughly 1.9% is narrow; a single quarter of cost pressure or softer demand could break the streak, particularly given the international exposure that introduces currency and macro variability.
Rising on-balance volume despite the stock trading below its 200-day moving average points to institutional accumulation ahead of a potential trend reversal, with MACD also recovering from a death cross.
→StableMomentum breakdown
- Expectation
- Price reclaims the 200-day moving average within 12 months, with on-balance volume continuing to rise as accumulation translates into sustained price action.
CounterThe moving average slope is still declining at roughly 1.1% per month; accumulation signals in a confirmed downtrend frequently precede a failed breakout rather than a sustained recovery.
A debt-to-equity ratio of 1.6 has drawn a leverage penalty in the risk profile, limiting financial flexibility and increasing sensitivity to any softening in operating cash flows.
→StableBear case
- Expectation
- Debt-to-equity falls below 1.2 as free cash flow is applied to debt reduction over the next four quarters.
CounterReturn on equity of 31%—superior to peers—suggests the company is generating strong returns on its leveraged capital base, implying the current structure may be economically rational rather than a vulnerability.
With roughly 69% of revenue generated outside the United States, currency movements and regional economic volatility represent a structural risk that a domestic slowdown alone would not capture.
→StableBear case
- Expectation
- International revenue share falls below 65% as domestic growth accelerates, or foreign-currency-adjusted growth remains positive for 3 consecutive quarters.
CounterHigh international exposure also provides geographic diversification; a weaker U.S. dollar would be a direct earnings tailwind for this revenue mix.
At the current price, roughly 9% of headroom remains to the take-profit level with a risk/reward ratio of approximately 1.88 to 1, which clears the minimum asymmetry threshold for entry.
→StablePrice targets
- Expectation
- Price advances to the $174 take-profit level within 12 months as earnings delivery and improving sentiment close the gap.
CounterAnalyst coverage is light at roughly 10 firms, dampening the signal behind the 25% analyst upside target; a rich multiple on soft growth could limit re-rating potential even if earnings hold.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Four consecutive earnings beats and rising volume accumulation suggest the business is delivering ahead of expectations, but a confirmed downtrend and 69% international revenue exposure leave meaningful risks for holders looking to the 9% upside to the take-profit level.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 5.5 |
| Gross margin | 1.8 |
| Op margin | 5.0 |
| Net margin | 3.8 |
| Current ratio | 4.4 |
| FCF quality | 7.9 |
| Moat | 5.4 |
| Piotroski F | 6.7 |
- ▸Excellent ROE: 31%
- ▸No competitive moat
Growth
3.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.2 |
| EPS growth | 2.9 |
Momentum
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.3 |
| MACD | 10.0 |
| OBV | 6.2 |
| MA position | 6.5 |
| Volume | 2.5 |
- ▸Below 200-MA, MA slope flat
Sentiment
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.0 |
| Price target | 7.7 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (10.0) — signal dampened
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
5.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.0 |
| quality rank | 8.0 |
| growth rank | 4.2 |
- ▸Superior ROE vs peers
Technical
2.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.5 |
| support resistance | 0.7 |
| 52w position | 6.9 |
Risk (lower is worse)
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.9 |
| days to cover | 6.9 |
| volatility | 6.8 |
| put call | 10.0 |
| implied vol | 5.4 |
| beta | 8.0 |
| debt equity | 3.7 |
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 3.4 |
| dividend safety | 6.5 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 240.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:5.7>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:27d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.5<1.5@spot
Warning (2)
- DEATH_CROSS:momentum=5.7>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.50
Upside
+4.4%
Downside
8.7%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 67
EdgeCatalyst-Driven — Earnings in 27d with 4/4 beat streak
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 4.3 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Risk (lower is worse) at 7.0) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:0.5<1.5@spot) reinforce the read. Current asymmetry R:R is 0.50 — supplementary context, not the trigger for this path.
The strongest dimensions are Risk (lower is worse) at 7.0, Sentiment at 6.7, and Value at 6.1; the weakest are Technical at 2.7, Growth at 3.5, and Insider at 5.0. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of 0.50 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Consistent Four Quarter Beat Streak
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Volume Accumulation During Recovery
Trip ifOn-balance volume turns negative (declining) for 6 consecutive weeks while price remains below the 200-day moving average.
- P3Elevated Leverage Headwind
Trip ifDebt-to-equity ratio rises above 2.5x.
- P4International Revenue Concentration
Trip ifInternational revenue share falls below 60% for 2 consecutive annual reports.
- P5Favorable Risk Reward With Headroom
Trip ifUpside to take-profit compresses below 3%.