Avery Dennison 2025 Q2 Earnings Misses Revenue Targets, Net Income Rises 6.9%

Avery Dennison (AVY) reported its fiscal 2025 Q2 earnings on Jul 21st, 2025. Avery Dennison's earnings per share (EPS) of $2.42 exceeded analysts' expectations of $2.39, despite a slight revenue shortfall of $2.22 billion compared to the predicted $2.24 billion. The company issued guidance for Q3 2025 with EPS expected between $2.14 and $2.30, which fell below analyst estimates, indicating a cautious outlook. While there were some challenges, the company managed to show resilience through cost management and strategic initiatives.

Revenue
Avery Dennison experienced a slight decline in total revenue for 2025 Q2, registering $2.22 billion, a decrease from the $2.24 billion recorded in the same quarter of 2024. The Materials Group contributed $1.55 billion, while the Solutions Group added $670.30 million to the figures. These results reflect a minor contraction in both segments, indicating a challenging operating environment.

Earnings/Net Income
The company reported a 10.2% increase in EPS to $2.42, up from $2.19 in the previous year, reflecting strong earnings growth. Net income rose to $189 million, a 6.9% increase from $176.80 million in 2024 Q2. This performance indicates a positive trend in profitability.

Price Action
Avery Dennison's stock price has shown mixed movement, with a slight drop of 0.16% during the latest trading day and a decrease of 0.80% over the past week. However, the stock has gained 2.91% month-to-date, reflecting some positive investor sentiment despite recent earnings results.

Post-Earnings Price Action Review
Following the release of Avery Dennison's quarterly earnings report, the strategy of purchasing AVY shares when revenue increased quarter-over-quarter and holding for 30 days was evaluated. Although this approach yielded moderate returns, it underperformed the overall market. The compound annual growth rate (CAGR) was recorded at 9.80%, falling short of the benchmark by 29.49%. Despite the minimal risk, as indicated by a maximum drawdown of 0.00% and a Sharpe ratio of 0.39, the returns were conservative. This strategy may appeal to investors prioritizing stability over aggressive growth.

CEO Commentary
"We delivered a solid second quarter, with earnings above expectations in a dynamic environment, reflecting the strength of our overall portfolio," said Deon Stander, President and CEO. He noted that trade policy changes impacted sourcing demand for apparel and retail categories, but growth in high-value categories and productivity efforts mitigated these effects. Stander emphasized the uncertainty surrounding trade policies, stating the company is prepared for various scenarios while continuing to drive key initiatives for profitable growth. He expressed gratitude for the team’s dedication to excellence amid current challenges.

Guidance
Avery Dennison expects third quarter 2025 reported earnings per share of $2.14 to $2.30. Excluding an estimated impact of approximately $0.10 per share from restructuring charges, the company anticipates adjusted earnings per share in the range of $2.24 to $2.40.

Additional News
In recent developments, Avery Dennison increased its quarterly dividend to $0.94 per share, representing a 7% rise over the previous quarter. This move reflects the company's commitment to returning value to shareholders. Additionally, the company repurchased 2.0 million shares at a total cost of $360 million during the first half of 2025, further demonstrating its strategic capital deployment. The company's strong balance sheet and disciplined capital allocation strategy continue to support these shareholder-focused activities.