US Equities Analysis

AVY — Avery Dennison

Research evidence pack

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2. Company Fundamentals

2.1 Competitiveness

Metric Value
Operating Margins 12.6%
Profit Margins 7.66%
Return on Equity 30.86%
Return on Assets 8.27%
Free Float 0.08B
Dividend Yield 2.41%
Short Int % Utilisation 3.27%

2.2 Growth

Metric Value
Revenue Growth 7.0%
Free Cash Flow 0.81B
EBITDA 10.69 (Ratio)
Enterprise Value 15.43B
EV/Revenue 1.71
EV/EBITDA 10.69

Revenue growth of 7.0% indicates steady, moderate expansion.

2.3 Management

Role Metric
Consensus Rating N/A

2.4 Return

Metric Value
Expected Return (Ann.)* 8.06%
Risk / Std Dev (Ann.)* 25.26%
1-Year Price Return* 4.69%

Latest Market Data (as of 2026-08-14, US Eastern time):

Metric Value
Last Price $178.93
52-Week Range $152.42 – $199.54
Observation Count 251 trading days

The return and risk statistics use daily adjusted closes from the retrieved one-year series and annualise daily moments using 252 trading days. The last price is the latest regular-market price reported for the stated date. Source: Yahoo Finance market data.

2.5 FCFF DCF Valuation

Valuation basis: This research model follows a five-year, unlevered FCFF DCF. It starts from reported annual operating inputs, forecasts revenue and operating cash conversion under an explicit mechanical policy, discounts FCFF at WACC, applies a Gordon-growth terminal value, and bridges enterprise value to an indicative common-equity value per share. It is an analytical estimate rather than a recommendation or personalised target price.

Step 1 — Forecast Operating Profit and NOPAT

Reported operating input Value
Revenue $8.86B
Prior annual revenue $8.76B
EBIT $1.06B
Tax rate 25.63%
NOPAT = EBIT × (1 − tax rate) $788.70M
Forecast start-growth basis 1.14%
Forecast policy latest reported annual revenue growth, bounded to -10.00% / 15.00%

Step 2 — Calculate FCFF

Current FCFF building block Value
NOPAT $788.70M
Add: depreciation & amortisation $328.20M
Less: capital expenditure -$200.40M
Less/(add): working-capital cash-flow movement -$242.80M
Current unlevered FCFF $673.70M

Explicit FCFF forecast

Forecast year Revenue growth NOPAT D&A Capex Change in NWC FCFF Present value
1 1.14% $797.69M $331.94M -$202.68M -$245.57M $681.38M $656.19M
2 1.48% $809.49M $336.85M -$238.48M -$249.20M $658.67M $588.29M
3 1.82% $824.22M $342.98M -$276.21M -$253.74M $637.27M $527.87M
4 2.16% $842.03M $350.39M -$316.28M -$259.22M $616.92M $473.94M
5 2.50% $863.08M $359.15M -$359.15M -$265.70M $597.38M $425.63M

Step 3 — Determine the Discount Rate (WACC)

WACC input Value
Risk-free rate 4.71%
Equity risk premium assumption 5.50%
Beta 0.81
Cost of equity 9.18%
Pre-tax cost of debt 3.93%
WACC 7.82%
WACC validation within standard range

Step 4 — Estimate Terminal Value

Terminal-value input Value
Perpetuity growth rate 2.50%
Terminal value $11.50B
Implied terminal EV / EBITDA 7.57x
Terminal value as % of enterprise value 74.71%

Step 5 — Discount Cash Flows to Enterprise Value

Enterprise-value component Value
Present value of explicit FCFF $2.67B
Present value of terminal value $7.89B
Indicated enterprise value $10.56B
Discounting convention mid-year for explicit FCFF; terminal value discounted at year-end five

Step 6 — Convert Enterprise Value to Equity Value

Equity bridge Value
Indicated enterprise value $10.56B
Less: gross interest-bearing debt $3.73B
Add: cash and equivalents $202.80M
Add: affiliate investments $0.00
Less: minority interests $0.00
Indicated common equity value $7.03B

Step 7 — Calculate Indicative Value Per Share

Per-share output Value
Shares used 78,300,000.00
Share-count basis reported diluted weighted-average shares
Current market price $178.24
DCF indicative value per share $89.82
Indicative value vs. market price -49.61%

Model Integrity Checks

Check Result
Perpetuity growth is below the risk-free rate pass
Perpetuity growth is below WACC pass
WACC is within the configured operating-company range pass
Terminal-year FCFF is positive pass
Terminal capex converges to D&A pass
Terminal-value concentration within review band
Implied price differs from spot by more than 30% review required

2.6 Investor-Style Research Screen

Educational screen Result
Buffett-inspired cash-quality checks 4/4 evidenced checks
Lynch-inspired balance-and-growth checks 4/4 evidenced checks

Data lineage: Yahoo Finance public market and reported-statement data; retrieval timestamp: 2026-08-18 17:23:31.649275 UTC; latest reported fiscal period: 2025-12-31 00:00:00. Default assumptions: five-year forecast, mid-year discounting for explicit FCFF, a maximum 2.50% perpetuity-growth rate below both WACC and the risk-free rate, historical operating-ratio persistence, and capex convergence to D&A by year five. No sell-side consensus or management guidance is substituted for reported inputs. This is research and analysis only, not personalized financial advice.

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