Avery Dennison Q2 Earnings Beat on Pricing & Productivity Gains

Revenues increased 10.9% year over year to $2.46 billion and beat the consensus estimate of $2.29 billion. Strong volume growth, productivity gains, and favorable pricing and raw-material dynamics supported the results. Organic sales rose 7.6%.

Avery Dennison's Q2 Margins Expand

The cost of sales in the quarter increased 9.6% year over year to $1.73 billion. Gross profit rose 14.1% to $729.4 million. The gross margin came in at 29.6%, up from the prior-year quarter’s 28.8%.

Marketing, general and administrative expenses were $352.4 million compared with $394.8 million in the year-ago quarter. Adjusted operating profit increased to $334.6 million from $286.7 million. The adjusted operating margin was 13.6% compared with 12.9% in the prior-year quarter.

Adjusted EBITDA advanced 14.6% to $421 million. The corresponding margin improved 50 basis points to 17.1%. Volume, productivity and the net benefit of pricing and raw-material costs supported profitability, though higher employee-related expenses remained a headwind.

AVY’s Segments Performance

Revenues in the Materials Group segment increased 15.9% year over year to $1.80 billion in the reported quarter. Our estimate was $1.61 billion. On an organic basis, sales improved 9.7%, driven by high-single-digit volume and mix growth, and a low-single-digit increase in pricing. 

The segment’s adjusted operating profit increased 17.1% year over year to $284 million. Our estimate was $258 million. The adjusted operating margin was 15.8% compared with 15.6% in the prior-year quarter.

Revenues in the Solutions Group declined 0.5% year over year to $667 million. Our estimate was $672 million. On an organic basis, sales improved 2.6%, with overall apparel categories registering high-single-digit growth.

The segment’s adjusted operating income increased 14.2% year over year to $76.5 million. Our estimate was $67 million. The adjusted operating margin expanded to 11.5% from 10% in the year-ago quarter.

Avery Dennison’s Cash & Debt Position

The company returned $347 million in cash to shareholders through share repurchases and dividend payments in the first half of 2026. AVY repurchased 1.2 million shares, with payments totaling $198 million.

Avery Dennison ended the second quarter of 2026 with cash and cash equivalents of $227 million compared with $216 million at the end of the year-ago period.

The company’s long-term debt and finance leases were $3.18 billion at the end of the second quarter, up from $2.63 billion in the year-ago period. Its net-debt-to-adjusted-EBITDA ratio was 2.3X.

AVY realized approximately $34 million in pre-tax savings from restructuring actions in the first half of 2026. The company also incurred around $34 million in pre-tax restructuring charges.

AVY's 2026 Outlook Reflects Destocking Risk

Avery Dennison expects reported earnings of $9.40-$9.70 per share for 2026. Adjusted earnings are projected between $10 and $10.30 per share. The outlook assumes reported sales growth of 5-6% and organic growth of 3-4%.

AVY expects much of the customer inventory stocking recorded in the first half to unwind during the second half, with most destocking anticipated in the third quarter. The company consequently expects a greater-than-historical sequential earnings decline in that period. It is also targeting adjusted free cash flow conversion of approximately 100% and more than $60 million in incremental restructuring savings.

Avery Dennison Stock’s Price Performance

AVY shares have gained 1.5% in the past year compared with the industry’s growth of 5.2%.

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AVY’s Zacks Rank

Avery Dennison currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performances of Other Packaging Stocks

Packaging Corporation of America PKG reported second-quarter 2026 adjusted earnings of $2.35 per share, down 5.2% year over year but beating the Zacks Consensus Estimate of $2.31. The bottom line also came above Packaging Corp’s guidance of $2.33.

Packaging Corp’s revenues increased 14.7% year over year to $2.49 billion and surpassed the consensus estimate of $2.40 billion by 3.6%. Total corrugated products shipments reached an all-time quarterly record, rising 24.3% both per day and in total from the prior-year quarter. 

Crown Holdings, Inc. CCK posted second-quarter 2026 adjusted earnings of $2.49 per share, up 15.8% year over year. The figure surpassed the Zacks Consensus Estimate of $2.15 by 15.81%. 

Crown Holdings revenues increased 16.5% to $3.67 billion and beat the consensus estimate of $3.34 billion by 9.88%. Global beverage can volumes rose 5%, led by 6% growth in Europe and 5% growth in the Americas. This was partially offset by softer demand in Latin America. 

Sonoco Products Company SON reported adjusted earnings of $1.51 per share in the second quarter of 2026, beating the Zacks Consensus Estimate of $1.47 by 2.72%. The figure rose 10.2% from $1.37 in the year-ago quarter. Pricing actions, favorable foreign-exchange movements and productivity gains helped offset softer volume/mix during the quarter. 

Sonoco’s revenues of $1.885 billion declined 1.3% year over year and missed the consensus mark of $1.886 billion by 0.05%. Sonoco’s top line declined from the prior-year period primarily due to the absence of sales from the ThermoSafe business, which was divested in November 2025.  

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