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Avery Dennison Earnings Beat Estimates in Q3 on Productivity
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Key Takeaways
Avery Dennison's Q3 adjusted EPS rose 2.1% y/y to $2.42, beating estimates of $2.30.
Sales grew 5.2% to $2.33B, driven by pricing, high-value categories and productivity initiatives.
Avery Dennison expects 2026 adjusted EPS of $10.10-$10.24 and incremental restructuring savings above $65M.
Avery Dennison Corporation (AVY - Free Report) has reported adjusted earnings of $2.42 per share for the third quarter of 2026, up 2.1% from $2.37 in the year-ago quarter. The figure surpassed the Zacks Consensus Estimate of $2.30.
Including one-time items, earnings were $2.24 per share compared with $2.13 a year ago.
Sales increased 5.2% year over year to $2.33 billion, beating the consensus estimate of $2.30 billion. Organic sales improved 3.7%, supported by pricing gains, growth in high-value categories and productivity initiatives despite customer inventory destocking.
Avery Dennison Corporation Price, Consensus and EPS Surprise
The cost of sales increased 6.1% year over year to $1.68 billion. Gross profit rose 3.1% to $655 million. However, the gross margin contracted to 28.1% from 28.7% in the prior-year quarter.
Marketing, general and administrative expenses increased to $373 million from $354 million a year ago. Adjusted operating income inched up 0.4% to $282.1 million. The adjusted operating margin declined 60 basis points to 12.1%.
Adjusted EBITDA increased 0.7% to $367.7 million. The corresponding margin contracted 70 basis points to 15.8%. Higher employee-related costs and unfavorable volume/mix dynamics weighed on profitability, partially offsetting productivity gains.
Avery Dennison’s Q3 Segments Performance
Revenues in the Materials Group segment increased 8.5% year over year to $1.64 billion in the reported quarter. Our estimate was $1.61 billion. On an organic basis, sales improved 4.9%, driven by low-single-digit volume and mix growth, and a mid-single-digit increase in pricing.
The segment’s adjusted operating profit increased 0.4% year over year to $231.1 million. Our estimate was $235.5 million. The adjusted operating margin contracted to 14.1% from 15.2% in the prior-year quarter.
Revenues in the Solutions Group declined 1.8% year over year to $687 million. Our estimate was $692 million. On an organic basis, sales improved 0.8%, with overall apparel categories registering mid-single-digit growth.
AVY's Cash Flow & Balance Sheet Position
The company returned $481 million in cash to shareholders through share repurchases and dividend payments in the first nine months of 2026. AVY repurchased 1.5 million shares, with payments totaling $257 million.
Avery Dennison ended the third quarter of 2026 with cash and cash equivalents of $271 million compared with $536 million at the end of the year-ago period.
The company’s long-term debt and finance leases were $3.17 billion at the end of the third quarter, down from $3.20 billion in the year-ago period. Its net-debt-to-adjusted-EBITDA ratio was 2.2X.
AVY realized approximately $54 million in pre-tax savings from restructuring actions in the first nine months of 2026. The company also incurred around $43 million in pre-tax restructuring charges.
Avery Dennison's 2026 Outlook Reflects Destocking
AVY expects adjusted earnings between $10.10 and $10.24 per share for 2026 compared with the previous guidance of $10-$10.30.
The outlook assumes reported sales growth of 5.5% and organic growth of 3.5%. The company expects most remaining customer inventory destocking from the first half to occur in the fourth quarter, alongside an estimated 1.5% sales headwind from calendar adjustments.
AVY expects more than $65 million in incremental restructuring savings, up from its previous projection of more than $60 million. It is targeting adjusted free cash flow conversion of at least 100%, with fixed and information technology capital spending of approximately $240 million, down from the earlier estimate of $260 million.
AVY Stock’s Price Performance
The company’s shares have gained 2.5% in the past year compared with the industry’s growth of 10.7%.
Packaging Corporation of America (PKG - Free Report) reported third-quarter 2026 adjusted earnings of $3.04 per share, up 11.4% year over year and beating the Zacks Consensus Estimate of $2.95 by 3.05%. The bottom line also exceeded the company's guidance of $2.91, driven by favorable price and mix in the Packaging segment and contributions from the acquired operations.
Packaging Corp’s net sales increased 12.5% year over year to $2.60 billion and beat the consensus estimate of $2.56 billion.
Sonoco Products Company (SON - Free Report) reported adjusted earnings of $1.67 per share in the third quarter of 2026, missing the Zacks Consensus Estimate of $1.76. The figure dipped 13% from $1.92 in the year-ago quarter.
Sonoco’s net sales of $2.04 billion declined 4.2% year over year and missed the consensus mark of $2.09 billion.
Packaging Stocks Awaiting Results
Ball Corporation (BALL - Free Report) is scheduled to release third-quarter 2026 results on Nov. 3. The Zacks Consensus Estimate for BALL’s third-quarter 2026 earnings is pegged at $1.06 per share, suggesting year-over-year growth of 3.9%.
The Zacks Consensus Estimate for Ball Corp’s top line is pegged at $3.74 billion, indicating growth of 10.6% from the prior-year reported figure.
View the Zacks #1 Rank List
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Avery Dennison Earnings Beat Estimates in Q3 on Productivity
Key Takeaways
Avery Dennison Corporation (AVY - Free Report) has reported adjusted earnings of $2.42 per share for the third quarter of 2026, up 2.1% from $2.37 in the year-ago quarter. The figure surpassed the Zacks Consensus Estimate of $2.30.
Including one-time items, earnings were $2.24 per share compared with $2.13 a year ago.
Sales increased 5.2% year over year to $2.33 billion, beating the consensus estimate of $2.30 billion. Organic sales improved 3.7%, supported by pricing gains, growth in high-value categories and productivity initiatives despite customer inventory destocking.
Avery Dennison Corporation Price, Consensus and EPS Surprise
Avery Dennison Corporation price-consensus-eps-surprise-chart | Avery Dennison Corporation Quote
AVY's Q3 Margins Contract
The cost of sales increased 6.1% year over year to $1.68 billion. Gross profit rose 3.1% to $655 million. However, the gross margin contracted to 28.1% from 28.7% in the prior-year quarter.
Marketing, general and administrative expenses increased to $373 million from $354 million a year ago. Adjusted operating income inched up 0.4% to $282.1 million. The adjusted operating margin declined 60 basis points to 12.1%.
Adjusted EBITDA increased 0.7% to $367.7 million. The corresponding margin contracted 70 basis points to 15.8%. Higher employee-related costs and unfavorable volume/mix dynamics weighed on profitability, partially offsetting productivity gains.
Avery Dennison’s Q3 Segments Performance
Revenues in the Materials Group segment increased 8.5% year over year to $1.64 billion in the reported quarter. Our estimate was $1.61 billion. On an organic basis, sales improved 4.9%, driven by low-single-digit volume and mix growth, and a mid-single-digit increase in pricing.
The segment’s adjusted operating profit increased 0.4% year over year to $231.1 million. Our estimate was $235.5 million. The adjusted operating margin contracted to 14.1% from 15.2% in the prior-year quarter.
Revenues in the Solutions Group declined 1.8% year over year to $687 million. Our estimate was $692 million. On an organic basis, sales improved 0.8%, with overall apparel categories registering mid-single-digit growth.
AVY's Cash Flow & Balance Sheet Position
The company returned $481 million in cash to shareholders through share repurchases and dividend payments in the first nine months of 2026. AVY repurchased 1.5 million shares, with payments totaling $257 million.
Avery Dennison ended the third quarter of 2026 with cash and cash equivalents of $271 million compared with $536 million at the end of the year-ago period.
The company’s long-term debt and finance leases were $3.17 billion at the end of the third quarter, down from $3.20 billion in the year-ago period. Its net-debt-to-adjusted-EBITDA ratio was 2.2X.
AVY realized approximately $54 million in pre-tax savings from restructuring actions in the first nine months of 2026. The company also incurred around $43 million in pre-tax restructuring charges.
Avery Dennison's 2026 Outlook Reflects Destocking
AVY expects adjusted earnings between $10.10 and $10.24 per share for 2026 compared with the previous guidance of $10-$10.30.
The outlook assumes reported sales growth of 5.5% and organic growth of 3.5%. The company expects most remaining customer inventory destocking from the first half to occur in the fourth quarter, alongside an estimated 1.5% sales headwind from calendar adjustments.
AVY expects more than $65 million in incremental restructuring savings, up from its previous projection of more than $60 million. It is targeting adjusted free cash flow conversion of at least 100%, with fixed and information technology capital spending of approximately $240 million, down from the earlier estimate of $260 million.
AVY Stock’s Price Performance
The company’s shares have gained 2.5% in the past year compared with the industry’s growth of 10.7%.
Avery Dennison’s Zacks Rank
AVY currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performances of Other Packaging Stocks
Packaging Corporation of America (PKG - Free Report) reported third-quarter 2026 adjusted earnings of $3.04 per share, up 11.4% year over year and beating the Zacks Consensus Estimate of $2.95 by 3.05%. The bottom line also exceeded the company's guidance of $2.91, driven by favorable price and mix in the Packaging segment and contributions from the acquired operations.
Packaging Corp’s net sales increased 12.5% year over year to $2.60 billion and beat the consensus estimate of $2.56 billion.
Sonoco Products Company (SON - Free Report) reported adjusted earnings of $1.67 per share in the third quarter of 2026, missing the Zacks Consensus Estimate of $1.76. The figure dipped 13% from $1.92 in the year-ago quarter.
Sonoco’s net sales of $2.04 billion declined 4.2% year over year and missed the consensus mark of $2.09 billion.
Packaging Stocks Awaiting Results
Ball Corporation (BALL - Free Report) is scheduled to release third-quarter 2026 results on Nov. 3. The Zacks Consensus Estimate for BALL’s third-quarter 2026 earnings is pegged at $1.06 per share, suggesting year-over-year growth of 3.9%.
The Zacks Consensus Estimate for Ball Corp’s top line is pegged at $3.74 billion, indicating growth of 10.6% from the prior-year reported figure.