Stock Analysis | Avery Dennison Outlook - A Bearish Crossroads with Mixed Analyst Signals

1. Market Snapshot: A Weak Technical Picture

Headline Takeaway: Avery Dennison is showing a weak technical profile, with bearish signals dominating and a current stock price trend of -0.35%.

The technical analysis points to a concerning outlook, with an internal diagnostic score of 3.27 (10 = best) and four bearish indicators out of five analyzed. The model suggests avoiding the stock due to its weak trend and unclear direction.

2. News Highlights: Packaging and Legal News Steal the Spotlight

• Oreo’s Parent Company Sues Aldi – Mondelez International is suing Aldi, claiming that the grocery chain is copying cookie and cracker packaging. While this doesn’t directly impact Avery Dennison, it highlights a broader trend in packaging-related legal actions that could influence the sector.
• EPE USA’s Sustainable Packaging Innovations – EPE USA is advancing in eco-friendly packaging solutions. Avery Dennison, as a leader in labeling and packaging materials, could face increased competition or benefit from industry-wide shifts toward sustainability.
• Public Employees Retirement System Cuts Stake in Packaging Co. – Institutional investors are trimming exposure in the packaging sector, signaling potential caution around the space. This could affect investor sentiment for Avery Dennison and similar stocks.

3. Analyst Views & Fundamentals: Mixed Signals from Analysts

Average Rating Score: 3.80 (simple mean).

Weighted Rating Score: 2.43 (performance-weighted).

Consistency: Analysts show significant divergence, with ratings ranging from "Strong Buy" to "Underperform".

Current stock price trends (-0.35%) align with the market's neutral to bearish expectations, as reflected in the low-weighted rating. This suggests that analysts’ recommendations, on average, do not strongly deviate from the current price direction.

Key Fundamental Values and Model Scores:

• Annualized return on equity (%): 31.49% – Internal diagnostic score: 0
• Operating cycle: 121.77 days – Internal diagnostic score: 0
• Total operating revenue (YoY growth rate %): -0.41% – Internal diagnostic score: 2
• Net cash flow from operating activities / Operating revenue (%): 4.41% – Internal diagnostic score: 2
• Basic earnings per share (YoY growth rate %): 3.92% – Internal diagnostic score: 1
• Net cash flow from operating activities (YoY growth rate %): -39.37% – Internal diagnostic score: 1
• Total profit / EBIT (%): 88.14% – Internal diagnostic score: 2
• Cash-UP: 0.24 – Internal diagnostic score: 3
• Diluted earnings per share (YoY growth rate %): 4.41% – Internal diagnostic score: 1
• Operating revenue (YoY growth rate %): -0.41% – Internal diagnostic score: 2

4. Money-Flow Trends: Big Money on the Move

The fund-flow analysis shows an overall positive trend with an internal diagnostic score of 7.64 (good). Here’s how the flow is trending by investor size:

• Small investors: 51.18% inflow ratio, positive trend
• Medium investors: 50.70% inflow ratio, positive trend
• Large investors: 52.39% inflow ratio, positive trend
• Extra-large investors: 48.64% inflow ratio, negative trend

This suggests that while big money is pulling back slightly, small and medium investors are still showing confidence in the stock. The overall inflow ratio stands at 50.26%, indicating moderate net inflow.

5. Key Technical Signals: Bearish Momentum with Volatility

• WR Overbought – Internal diagnostic score: 1 (very weak). A sign of potential bearish reversal.
• Marubozu White – Score: 3.27. A strong bearish pattern, especially after overbought conditions.
• Bearish Engulfing – Score: 2.27. A bearish reversal signal.
• MACD Death Cross – Score: 3.62. Suggests bearish momentum, but with neutral bias.
• WR Oversold – Score: 6.2. A rare positive signal in an otherwise bearish setup.

Recent Chart Patterns (Last 5 Days):

• August 22: WR Overbought, Marubozu White
• August 26: WR Oversold
• August 28: WR Oversold, MACD Death Cross, Bearish Engulfing
• August 27: WR Oversold
• August 29: WR Oversold

Key Insights: The technical side is weak, with bearish signals dominating and volatility making it hard to determine a clear direction.

6. Conclusion: Consider Caution Until Clarity Emerges

Avery Dennison is in a precarious technical position with more than enough bearish signals to suggest caution. While the fundamental model scores aren’t extremely poor (overall score 3.76), the technical weakness and mixed analyst ratings create a conflicting picture. With a recent influx of bearish patterns, especially overbought WR and engulfing patterns, it may be wise to consider waiting for a clearer breakout or better alignment between technical and fundamental factors before taking a position. For now, the outlook is bearish, and patience is key.