Stock Analysis | Avery Dennison Outlook - Technical Weakness and Mixed Analyst Signals

1. Market Snapshot

Headline Takeaway: Avery Dennison (AVY) is showing signs of technical weakness despite a recent 3.35% price rise, with internal diagnostic scores suggesting caution ahead.

2. News Highlights

• Oreo’s parent company sues Aldi over packaging: Mondelez is taking legal action against Aldi for allegedly copying its packaging on snacks like Oreo and Chips Ahoy. While this doesn’t directly affect Avery Dennison, it highlights growing tensions in the packaging and consumer goods sector.
• EPE USA advances sustainable packaging: EPE USA is making strides in eco-friendly packaging solutions, which could increase demand for sustainable alternatives and indirectly impact Avery Dennison, a major player in labeling and packaging materials.
• Public Employees Retirement System of Ohio cuts stake in Packaging Co. of America: This move signals a shift in institutional investment focus, potentially affecting investor sentiment toward the broader packaging industry, which Avery Dennison is part of.

3. Analyst Views & Fundamentals

Avery Dennison has attracted attention from five institutional analysts over the last 20 days, with a simple average rating of 3.80 and a performance-weighted rating of 2.43. These scores indicate a generally neutral to bearish outlook, with analysts showing a lack of consensus—ratings ranged from "Strong Buy" to "Buy" and "Neutral."

The current price trend (+3.35%) has diverged from these ratings, suggesting a mismatch between market action and analyst expectations. This divergence often points to uncertainty or potential mispricing in the stock.

Key Fundamental Factors:

• Operating Revenue YoY Growth Rate: -0.41% (score: 3). Revenue is declining compared to the previous year, which is a negative signal.
• Net Cash Flow from Operating Activities / Operating Revenue: 4.41% (score: 3). The company is generating modest operating cash flow relative to its revenue, but there’s room for improvement.
• Shareholders’ Equity / Total Liabilities: 34.58% (score: 3). This ratio shows a moderate level of leverage, which is a mixed signal for long-term stability.
• PE Ratio: 82.62 (score: 3). The high valuation is a red flag, especially if earnings aren’t growing to justify it.
• PS Ratio: 7.03 (score: 0). This indicates the company is selling its stock at a high price relative to sales, which can deter value investors.
• Net Cash Flow YoY Growth Rate: -39.37% (score: 2). A significant drop in operating cash flow suggests operational challenges.

4. Money-Flow Trends

Big-money flows are currently showing a positive trend for Avery Dennison, with inflow ratios across all investor categories above 50%. The fund-flow score is 7.87 on an internal diagnostic scale (0-10), which indicates strong institutional and retail investor interest.

While small and retail investors are showing positive inflow trends (51.85% and 50.35%, respectively), large and extra-large investors are also contributing significantly (51.34% and 50.38%). This broad-based inflow is a positive sign for the stock’s near-term momentum, but it must be weighed against the negative technical and fundamental signals.

5. Key Technical Signals

The technical picture for Avery Dennison is bleak, with an internal diagnostic score of 2.15 and three bearish indicators outweighing no bullish ones. The stock is currently in a weak state, and traders are advised to avoid it due to the risk of a further decline.

Recent Indicators by Date:

• 2025-08-15: Bearish Engulfing (internal diagnostic score: 2.98). This candlestick pattern signals a potential reversal to the downside.
• 2025-08-12: WR Overbought (1.00) and MACD Golden Cross (2.48). These signals suggest overbought conditions and a weakening trend, increasing the risk of a pullback.
• 2025-08-13: WR Overbought (1.00). Overbought conditions persist, supporting the bearish outlook.

Key Insights:

• The technical indicators are overwhelmingly bearish, with three negative signals to zero bullish ones.
• Historical performance of these indicators is also mixed—Bearish Engulfing has a 44.44% win rate with an average return of +0.24%, but WR Overbought and MACD Golden Cross are both bearish in nature with poor historical returns (-1.34% and -0.77%, respectively).
• With such a negative technical setup, the momentum is clearly on the downside.

6. Conclusion

Consider waiting for a pull-back: Avery Dennison is showing a mix of strong fund flows and weak technical signals. While the stock has gained 3.35% recently, internal diagnostic scores suggest that technical momentum is on the downside. With three bearish indicators active and no bullish ones, and given the lack of alignment between analyst ratings and price action, it may be wise to wait for a clearer breakout or a more favorable risk/reward balance before committing capital.