Avery Dennison Stock Fair Value – Avery Dennison’s High P/E Ratio Leaves Investors Cautious
December 13, 2023
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This indicates that investors are paying more for earnings, and this ratio is often used to gauge whether a stock is overvalued or not. For me, Avery Dennison ($NYSE:AVY)’s high P/E ratio is too expensive, as it may not be able to deliver returns that justify the high price point. This further compounds the risk of investing in the stock and leaves me feeling cautious. Despite this, Avery Dennison still has high potential to grow and offer attractive returns in the future. This is why some investors may still be interested in buying the stock, despite its high P/E ratio.
However, as an investor who values caution, I find Avery Dennison’s high P/E ratio too expensive for me.
Price History
On Tuesday, the company’s stock opened at $193.1 and closed at $190.9, down by 0.9% from previous closing price of 192.7. This high P/E ratio has caused investors to adopt a cautious stance towards investing in the company’s stock. While it reflects the market’s confidence in Avery Dennison‘s current performance and reputation, it also implies a degree of risk due to the company’s potential to falter if its profit margins do not deliver as expected. Moreover, the high P/E ratio could also lead to a decline in investor confidence if the company fails to continue delivering impressive results.
In light of this, it is clear that Avery Dennison’s high P/E ratio poses a challenge for potential investors. While it is an indication of the company’s strong performance so far, it could also lead to disappointment if the company fails to live up to expectations in the future. As such, investors must weigh the risk of investing in the company against its potential rewards before deciding to make any investments. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Avery Dennison. More…
| Total Revenues | Net Income | Net Margin |
| 8.28k | 482.8 | 7.0% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Avery Dennison. More…
| Operations | Investing | Financing |
| 859.9 | -446.9 | -327.4 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Avery Dennison. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 8.13k | 6.07k | 25.61 |
Key Ratios Snapshot
Some of the financial key ratios for Avery Dennison are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 7.0% | 3.1% | 9.3% |
| FCF Margin | ROE | ROA |
| 6.9% | 23.7% | 5.9% |
Analysis – Avery Dennison Stock Fair Value
At GoodWhale, we provide financial analysis of companies like Avery Dennison. After analyzing Avery Dennison’s financials, our proprietary Valuation Line calculated the fair value of a single AVERY DENNISON share to be around $208.1. However, the current market price of AVERY DENNISON stock is $190.9, making it a fair price that is undervalued by 8.3%. This means that there is an opportunity to buy AVERY DENNISON stock at a lower price than its fair value. More…
Peers
Its main competitors are Seco/Warwick SA, Omni-Lite Industries Canada Inc, and Curtiss-Wright Corp.
– Seco/Warwick SA ($LTS:0LYW)
Seco/Warwick SA is a thermal-processing equipment manufacturer based in Poland. The company has a market cap of 146.14M as of 2022 and a Return on Equity of 9.69%. Seco/Warwick SA designs, manufactures, and sells furnaces and ovens for a variety of industries including aerospace, automotive, and medical device. The company’s products are used in a variety of applications including heat treating, brazing, soldering, and annealing.
– Omni-Lite Industries Canada Inc ($TSXV:OML)
Omni-Lite Industries Canada Inc is engaged in the development and production of metal alloys and composite products. The company operates through two segments: Metal Injection Molding and Castings, and Composite Products. The Metal Injection Molding and Castings segment offers metal injection molded and cast products for aerospace, military, automotive, and commercial applications. The Composite Products segment provides composite materials, products, and services for the aerospace, military, and commercial markets.
– Curtiss-Wright Corp ($NYSE:CW)
Curtiss-Wright Corporation is a diversified company that provides engineered products and services to the aerospace, defense, and energy markets. The company has a market capitalization of $6.17 billion and a return on equity of 12.64%. The company’s products and services include aircraft brakes, control systems, and engines; defense electronics and software; and power generation and distribution equipment. Curtiss-Wright has a long history of innovation and has been involved in some of the most important technological advances of the 20th century. The company was founded in 1929 by Wright Aeronautical Corporation and Curtiss Aeroplane and Motor Company.
Summary
Avery Dennison is an American company that manufactures pressure-sensitive materials and other labeling solutions. Investing analysis reveals that the stock of Avery Dennison has a high price-to-earnings ratio, meaning that the share price is higher than what would be expected for the company’s earnings. This suggests that the stock is overvalued and may be too risky for some investors. However, those with a higher risk tolerance may find the potential for appreciation attractive, as the company has a strong history of performance and may be positioned for long-term success.
