Avery Dennison Outlook - Bearish Momentum and Weak Fundamentals Signal Caution

Market Snapshot

Headline: Avery Dennison's stock is in a weak technical state, with bearish signals overpowering any potential bullish momentum. The current price trend shows a decline of -3.50%, and the stock is being advised to be avoided based on our internal diagnostic scores (0-10).

News Highlights

Recent news includes several non-Avery Dennison-related developments that could influence the broader market:

• Ukrainian War Update: North Korea reportedly sent 20,000 containers of ammunition to Russia, raising global tensions. While unrelated to Avery Dennison, increased geopolitical risks may impact market sentiment and investor behavior.
• EPE USA's Sustainable Packaging: EPE USA announced a shift toward reusable and recyclable packaging materials. This trend in eco-friendly packaging may indirectly affect Avery Dennison, which also operates in the label and packaging industry.
• China’s Factory Activity: China's factory activity slightly improved in May, with the PMI at 49.5. This could signal stabilizing global demand, potentially supporting Avery Dennison’s international operations.

Analyst Views & Fundamentals

Average rating score (simple mean): 3.80, while the performance-weighted rating score is 2.43. These figures reflect diverging analyst opinions and mixed performance expectations. The recent analyst ratings include two "Neutral," two "Buy," and one "Strong Buy," indicating a lack of consensus among analysts.

The current price trend of a -3.50% drop aligns with the "weighted expectations match" in the market synthesis, meaning the market is reflecting the bearish bias seen in the ratings.

Key fundamental factor values and their internal diagnostic scores:

• Total operating revenue (YoY growth rate): -0.41% (internal diagnostic score: 2.37)
• Basic earnings per share (YoY growth rate): 3.92% (internal diagnostic score: 1.00)
• Shareholders’ equity attributable to parent company / Total liabilities: 34.58% (internal diagnostic score: 1.00)
• Equity multiplier: 3.89 (internal diagnostic score: 0.95)
• Operating cycle: 121.77 (internal diagnostic score: 0.95)
• ROE (diluted): 16.14% (internal diagnostic score: 0.93)

Money-Flow Trends

Avery Dennison's recent fund-flow patterns show a negative overall trend, with inflow ratios across all categories showing a decline. Here's a breakdown of the key inflow ratios:

• Large-inflow ratio: 47.85%
• Medium-inflow ratio: 48.50%
• Small-inflow ratio: 49.94%
• Overall inflow ratio: 47.24%

Big-money investors and institutional blocks are also pulling back, with a block-inflow ratio of 46.95%. These trends suggest that large market participants are cautious, and retail flows are not enough to offset the negative sentiment.

Key Technical Signals

The technical side of Avery Dennison is in a weak state, with two bearish indicators dominating over zero bullish ones. Our internal diagnostic scores for the key indicators are as follows:

• WR Oversold: internal diagnostic score: 3.16 – Neutral rise, indicating the stock is oversold but not a strong buy signal.
• Bearish Engulfing: internal diagnostic score: 1.58 – Biased bearish, suggesting a downward trend is likely to continue.

In the past five days, WR Oversold was observed on multiple dates, including September 10, 12, and 9 (with Bearish Engulfing on the 9th). These repeated bearish signals suggest that the momentum is clearly negative, and the trend quality is weak.

Conclusion

Avery Dennison is currently in a challenging phase, with weak technical signals and mixed analyst sentiment. Investors should exercise caution and consider waiting for a clearer reversal or pull-back before initiating any long positions. With the recent bearish patterns and weak fundamentals, now may not be the best time to enter or add to this position.