Avery Dennison Set to Report Q2 Earnings: Here's What to Expect

Avery Dennison (AVY) is slated to report Q2 2025 results on July 22, with consensus estimates projecting a slight revenue decline to $2.23 billion (down 0.2% year-over-year) and EPS of $2.38 (down 1.6% year-over-year), following recent estimate downgrades. Despite anticipated improved volumes across both the Materials Group and Solutions Group segments, higher raw material, labor, and freight costs, coupled with negative currency translation, are expected to pressure margins, although productivity improvements may offer some offset. The Zacks model does not conclusively predict an earnings beat for AVY, whose shares have underperformed, dipping 19% over the past year.

Analysis

Avery Dennison (AVY) faces a challenging outlook for its second-quarter 2025 earnings release, with consensus estimates pointing to a slight year-over-year contraction in both revenue and profitability. Projections peg revenue at $2.23 billion, a 0.2% decline, and EPS at $2.38, a 1.6% decline, reflecting downward revisions by analysts over the past 60 days. The core operational narrative suggests that improved volumes in both the Materials and Solutions Group segments are being nullified by significant headwinds, primarily from elevated raw material, labor, and freight costs, as well as adverse currency translation. Model-based forecasts for its segments predict a 0.3% revenue dip for the Materials Group and a 0.9% drop for the Solutions Group. This fundamental pressure is mirrored in the stock's performance, which has fallen 19% over the past year, substantially underperforming the industry's 5% decline. Furthermore, the Zacks model, with a negative Earnings ESP of -0.42%, does not indicate a high probability of a positive earnings surprise, adding a quantitative layer of caution despite the company's historical tendency to beat estimates.

Key Decisions for Investors

• Given the negative consensus estimates, persistent cost pressures, and a quantitative model predicting a potential earnings miss, a cautious stance on Avery Dennison is warranted ahead of the report.
• Investors should focus on management's commentary regarding margin resilience and the effectiveness of cost-saving initiatives, as this will be critical in assessing whether the company can overcome the headwinds impacting its top and bottom lines.
• Considering the stock's 19% underperformance and the challenging near-term outlook, it may be prudent to evaluate AVY's post-earnings guidance against peers like EMR or ITW, which are highlighted as having more favorable earnings setups.