Avery Dennison Corporation AVY has posted adjusted earnings of $2.47 per share for the first quarter of 2026, rising 7.4% from the year-ago period and beating the Zacks Consensus Estimate of $2.41. Revenues came in at $2.298 billion, growing 7% year over year and surpassing the consensus mark of $2.271 billion by 1.2%.
The quarter featured modest organic growth and steady profitability. The company gained from volume-led performance and continued cost management.
Sales advanced 2.3% excluding currency, as a 4.7% foreign-currency headwind weighed on reported growth. Organic sales increased 1.1%, while acquisitions were a 1.2% drag on the quarter’s growth bridge. Our model expected organic sales to inch up 0.2%, and acquisitions to have a positive impact of 1%.
Avery Dennison Corporation Price, Consensus and EPS Surprise
Avery Dennison Corporation price-consensus-eps-surprise-chart | Avery Dennison Corporation Quote
Avery Dennison Keeps Profitability Steady
Gross profit was $664.8 million, up from $621.5 million a year ago, with the gross margin essentially steady at 28.9%. Operating income was $271.9 million, marking a year-over-year increase of 6.8%. The operating margin came in at 11.8% for the quarter compared with the prior-year quarter’s 11.9%.
Adjusted EBITDA was $376.5 million, which marked a year-over-year increase of 6.8%. The adjusted EBITDA margin came in at 16.4%, flat with the first quarter of 2025.
AVY’s Segments Diverge on Growth & Margins
Materials Group delivered reported sales of $1.65 billion, up 11.4% year over year. Sales rose 3.6% excluding currency and 1.9% organically. We estimated revenues of $1.56 billion for this segment. Mid-single-digit volume/mix growth was partly offset by deflation-related price reductions. The segment’s adjusted operating profit increased 10.4% year over year to $254 million. Our estimate was $237 million.
Solutions Group sales were $649.2 million, down 2.8% year over year, with sales down 0.9% excluding currency and 0.9% organically. We estimated sales of $701 million for this segment. The company noted growth in higher-value categories, including Embelex and Vestcom, while Intelligent Labels and base categories were softer. The segment’s adjusted operating income dipped 14.2% year over year at $58.5 million. Our estimate was $65 million.
Avery Dennison’s Cash Flow Swing Is Meaningful
AVY generated an adjusted free cash flow of $104.4 million in the quarter, a sharp improvement from a negative $53.1 million in the year-ago period.
Capital returns remained active. The company returned $133 million to shareholders, including $72.3 million in dividends and $60.6 million in share repurchases, and noted that its share count at the quarter-end was down 1.9 million from a year ago (net of dilution from long-term incentive awards). Cash and cash equivalents ended at $255.1 million compared with 196 million in the prior-year quarter’s end. Net debt to adjusted EBITDA was 2.4X.
AVY’s Q2 View
For the second quarter of 2026, the company guided adjusted earnings to be $2.43-$2.53. The company expects reported sales growth of 2-4% and an organic sales increase of 0-2%.
Avery Dennison Stock’s Price Performance
AVY shares have lost 1% in the past year compared with the industry’s decline of 10.4%. In comparison, the broader Zacks Industrial Products sector has returned 39.5% and the S&P 500 has grown 35.6%.
AVY’s Zacks Rank
Avery Dennison currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Industrial Product Stocks Awaiting Results
AptarGroup, Inc. ATR is scheduled to release first-quarter 2026 results on April 30. The Zacks Consensus Estimate for ATR’s first-quarter 2026 earnings is pegged at $1.15 per share, indicating a year-over-year dip of 4.2%.
The consensus estimate for AptarGroup’s top line is pegged at $963 million, indicating an increase of 8.5% from the prior year’s actual. ATR has a trailing four-quarter average earnings surprise of 3.1%.
Silgan Holdings SLGN is slated to release first-quarter 2026 results on April 29. The Zacks Consensus Estimate for SLGN’s first-quarter 2026 earnings is pegged at 74 cents per share, indicating a year-over-year dip of 9.8%.
The consensus estimate for Silgan’s top line is pegged at $1.49 billion, indicating an increase of 1.8% from the prior year’s actual. SLGN has a trailing four-quarter average earnings surprise of 1.8%.
Q1 Performance of a Packaging Stock
Packaging Corporation of America PKG posted adjusted earnings of $2.40 per share in the first quarter of 2026, up 3.9% from $2.31 a year ago. Packaging Corp’s results beat the Zacks Consensus Estimate of $2.17 by 10.6%.
Net sales rose 10.6% year over year to $2.37 billion but missed the consensus mark of $2.41 billion by 1.9%. Favorable pricing and mix, along with lower fiber costs, supported Packaging Corp’s results, though special items weighed on reported profitability.
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This article originally published on Zacks Investment Research (zacks.com).