Adhesive manufacturing company Avery Dennison (NYSE: AVY) missed Wall Street’s revenue expectations in Q4 CY2025 as sales rose 3.9% year on year to $2.27 billion. Its non-GAAP profit of $2.45 per share was 2.9% above analysts’ consensus estimates.

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“We delivered solid full-year results in 2025, with adjusted EPS of $9.53, reflecting the durability of our business model in a dynamic environment. Despite tariff-related impacts and softer consumer volumes, our team successfully leveraged our proven productivity playbook to maintain an adjusted EBITDA margin of 16.4% and generate over $700 million in adjusted free cash flow,” said Deon Stander, president and CEO.

Company Overview

Founded as Kum Kleen Products, Avery Dennison (NYSE: AVY) is a manufacturer of adhesive materials, display graphics, and packaging products, serving various industries.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Regrettably, Avery Dennison’s sales grew at a tepid 4.9% compounded annual growth rate over the last five years. This fell short of our benchmark for the industrials sector and is a tough starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Avery Dennison’s recent performance shows its demand has slowed as its annualized revenue growth of 2.9% over the last two years was below its five-year trend.

We can dig further into the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Avery Dennison’s organic revenue averaged 2.4% year-on-year growth. Because this number aligns with its two-year revenue growth, we can see the company’s core operations (not acquisitions and divestitures) drove most of its results.

This quarter, Avery Dennison’s revenue grew by 3.9% year on year to $2.27 billion, falling short of Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 4.7% over the next 12 months. Although this projection suggests its newer products and services will fuel better top-line performance, it is still below average for the sector.

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Operating Margin

Avery Dennison’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 11.5% over the last five years. This profitability was solid for an industrials business and shows it’s an efficient company that manages its expenses well. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Analyzing the trend in its profitability, Avery Dennison’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. We like to see margin expansion, but we’re still happy with Avery Dennison’s performance considering most Industrial Packaging companies saw their margins plummet.

This quarter, Avery Dennison generated an operating margin profit margin of 10.6%, down 1.4 percentage points year on year. Since Avery Dennison’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Avery Dennison’s unimpressive 6.1% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

Avery Dennison’s two-year annual EPS growth of 10% was good and topped its 2.9% two-year revenue growth.

We can take a deeper look into Avery Dennison’s earnings quality to better understand the drivers of its performance. A two-year view shows that Avery Dennison has repurchased its stock, shrinking its share count by 4.4%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

In Q4, Avery Dennison reported adjusted EPS of $2.45, up from $2.38 in the same quarter last year. This print beat analysts’ estimates by 2.9%. Over the next 12 months, Wall Street expects Avery Dennison’s full-year EPS of $9.54 to grow 6.9%.

Key Takeaways from Avery Dennison’s Q4 Results

It was good to see Avery Dennison provide EPS guidance for next quarter that slightly beat analysts’ expectations. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its revenue slightly missed. Overall, this quarter was mixed. Still the stock traded up 4.4% to $195.08 immediately after reporting.

So do we think Avery Dennison is an attractive buy at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).