Avery Dennison Corp.AVY

Morningstar Rating

Stock Research and Analysis

by Daniel Rohr, CFA

Avery Dennison, maker of self-adhesive papers and films that cover everything from shampoo bottles to highway signs, is an industry leader with a history of delivering attractive returns on invested capital. Despite the gloomy global economic outlook, Read more

Bulls Say

Avery holds a dominant market share in many product lines. The firm has capitalized on its scale advantage, squeezing out wider margins than its smaller competitors.

Avery boasts an impressive record of innovation and technological expertise. The company's willingness to lend engineering and operations expertise to customers has produced sticky relationships.

Avery's revenue is broadly diversified geographically and well positioned to capitalize on emerging-markets prospects. Read more

Bears Say

The office and consumer product segment, which turns in the highest margin of Avery's business lines, faces serious head winds. Should current trends persist, this unit will see sales sag and profits shrink.

Despite significant investments, Avery's RFID initiative remains a loss-making endeavor. The long-term growth outlook and profitability picture for this project are highly uncertain.

The Paxar acquisition adds a relatively low-margin operation to Avery's stable of businesses, which will put pressure on the firm's overall operating margin even before integration costs are taken into account. Read more

Strategy

Avery's strategy for growth centers on international expansion, product innovation, and bolt-on acquisitions. With its core U.S. businesses maturing, Avery's domestic strategy emphasizes efficiency over Read more

Management

Dean Scarborough became president and CEO in early 2005. He boasts a lengthy and distinguished tenure at Avery, previously holding the role of COO. Kent Kresa, former chairman of Northrop Grumman NOC, is Avery's nonexecutive chairman of the board. We Read more

Profile

Avery Dennison manufactures pressure-sensitive materials, office products, and merchandise tags and labels. The company also runs a specialty converting business that produces Read more

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