Avery Dennison Outlook - Caution Advised as Technicals Deteriorate

Market Snapshot

Overall outlook: Weak technicals and mixed analyst signals suggest caution. The stock is currently down by 2.63%, in line with its underperforming ratings from analysts and negative technical indicators.

News Highlights

• Ukrainian War Developments: North Korea is reportedly supplying over 20,000 containers of munitions to support Russian operations. While not directly affecting Avery Dennison, global geopolitical tensions may weigh on investor sentiment, especially for materials-based companies like Avery Dennison.
• Sustainable Packaging Innovations: EPE USA announced new eco-friendly packaging solutions, signaling a trend shift in the packaging industry. Avery Dennison, a leader in labels and packaging, may see competitive pressure or opportunities in this space if it accelerates green initiatives.
• China’s Economic Data: China’s manufacturing activity in May showed a slight improvement, rising to 49.5 from 49.0 in April, but remains below the 50 threshold that separates contraction from expansion. This mixed economic signal could affect Avery Dennison’s global supply chains and customer demand.

Analyst Views & Fundamentals

Analyst sentiment remains mixed, with an average (simple mean) rating of 3.80 and a performance-weighted rating of 2.43. The ratings are scattered across Underperform and Neutral labels, showing little consensus. These scores align with the current price trend, which has seen a recent drop of 2.63%.

Key Fundamental Factors

• Operating Cycle: 121.77 days (internal diagnostic score 1.00) – A long operating cycle is a red flag for liquidity and working capital efficiency.
• Total Operating Revenue (YoY Growth Rate): -0.41% (internal diagnostic score 3.00) – Slight revenue contraction points to weak top-line performance.
• Net Cash Flow from Operating Activities (YoY Growth Rate): -39.37% (internal diagnostic score 1.00) – A sharp decline in cash flow from operations raises concerns about operational momentum.
• PE Ratio: 82.62 (internal diagnostic score 1.00) – Extremely high valuation multiple raises concerns for long-term investors.

Money-Flow Trends

Big money is moving out of Avery Dennison, with a block inflow ratio of 0.47, and an overall negative trend in large and extra-large capital flows. However, small investors are showing a positive trend, suggesting some retail optimism. The fund flow score is 7.83 (internal diagnostic score good), which highlights the disparity between retail and institutional behavior, with institutions clearly steering away from the stock.

Key Technical Signals

The technical indicators for Avery Dennison are clearly bearish. Two key signals in the last five days include:

• Williams %R (WR) Oversold: This has appeared multiple times and currently has an internal diagnostic score of 3.27. While the WR is in oversold territory, its recent performance has been only 51.56% win rate, suggesting it is not a strong buy signal.
• Bearish Engulfing Pattern: Identified on 2025-09-09 with an internal diagnostic score of 2.35. This candlestick pattern typically indicates a reversal to the downside and historically has performed poorly with a 41.67% win rate and 0.0% average return.

Key insights from the technical analysis: Bearish signals (2) clearly dominate over bullish ones (0). The stock is in a weak state, and investors are advised to avoid further risk.

Conclusion

Consider waiting for a pull-back or clearer signals before committing to a position. With weak technicals, mixed analyst sentiment, and poor fundamental performance, Avery Dennison is currently a stock to watch with caution. Investors may want to monitor earnings or any news on sustainable packaging initiatives to identify potential turning points in the company’s performance.