Avery Dennison Narrows 2026 Earnings Outlook

The Tip Desk · October 29, 2026 · 3 min read

The materials science company posted $2.33 billion of third-quarter net sales and now sees full-year reported EPS of $9.45 to $9.59.

Avery Dennison Corporation (AVY) reported third-quarter net sales of $2.33 billion, up 5.2% from a year earlier, as year-over-year growth slowed from the second quarter’s 10.9% increase. Organic sales rose 3.7%, after 7.6% organic growth in the second quarter.

Reported earnings were $2.24 a share. Adjusted earnings were $2.42 a share, up 2.1%, after a 19.4% adjusted increase in the second quarter.

President and CEO Deon Stander said the company delivered “another quarter of strong results, highlighted by continued improvement in our underlying organic sales and earnings growth,” and that innovation and service-led differentiation drove mid-single-digit organic growth in both high-value categories and base businesses. He also said teams delivered “robust productivity and generating impressive free cash flow” amid higher inflation and customer destocking.

The Materials Group, the larger of the two reportable segments, posted sales of $1.64 billion, up 8.5%. Organic Materials sales rose 4.9%, after 9.7% organic growth in the second quarter. The company said high-value and base categories each rose mid-single digits, with volume/mix growth of low single digits and a mid-single-digit price benefit.

Materials adjusted operating margin was 14.1%, down 110 basis points from a year earlier. Adjusted EBITDA margin fell 110 basis points to 16.4%. The company said productivity was more than offset by negative volume/mix and higher employee-related costs.

The Solutions Group posted sales of $687 million, down 1.8%. Organic Solutions sales rose 0.8%, after a 2.6% organic increase in the second quarter. High-value categories were comparable to the prior year, base categories rose low single digits, and overall apparel categories rose mid-single digits.

Solutions adjusted operating margin was 10.8%, up 80 basis points from a year earlier. Adjusted EBITDA margin was 17.8%. The company said productivity was partially offset by higher employee-related costs.

Companywide adjusted operating income was $282.1 million, with an adjusted operating margin of 12.1%. Adjusted EBITDA was $367.7 million, or 15.8% of sales. Net income was $169.7 million.

Adjusted free cash flow was $246.0 million in the third quarter, down from $268.7 million a year earlier. For the nine months ended September 30, 2026, adjusted free cash flow was $715.8 million, compared with $404.5 million in the year-earlier period.

Through the first three quarters of 2026, the company returned $481 million to shareholders through share repurchases and dividends. It repurchased 1.5 million shares, with payments totaling $257 million. Net of dilution, the share count at quarter-end was down 1.9 million from a year earlier. Net debt to adjusted EBITDA was 2.2 times, down from 2.3 times at the end of the second quarter.

Through the first three quarters, the company realized approximately $54 million in pre-tax savings from restructuring actions and incurred approximately $43 million in pre-tax restructuring charges. The reported effective tax rate was 29.6% for the three months ended September 30, 2026.

The company now expects full-year 2026 reported EPS of $9.45 to $9.59, a narrower range than the $9.40 to $9.70 it provided after the second quarter. Excluding an estimated $0.65 impact of restructuring charges and other items, it expects full-year adjusted EPS of $10.10 to $10.24, versus $10.00 to $10.30 after the second quarter.