Operating Margin - Avery Dennison Corp (NYSE:AVY)

Watchlist Manager

Watchlist

Price: 182.6 USD 0.52%

Market Cap: 14.1B USD

12.8%

Current

12%

Average

4.9%

Industry

Operating Margin represents how efficiently a company is able to generate profit through its core operations.

Higher ratios are generally better, illustrating the company is efficient in its operations and is good at turning sales into profits.

Operating Margin

12.8%

Operating Profit

1.1B

Revenue

8.8B

Operating Margin Across Competitors

Country		Company	Market Cap	Operating Margin
US		Avery Dennison Corp NYSE:AVY	14.2B USD	13%
US	W	Westrock Co LSE:0LW9	1.3T USD	5%
US		International Paper Co NYSE:IP	20.3B USD	-1%
UK		Amcor PLC NYSE:AMCR	19B USD	9%
US		Packaging Corp of America NYSE:PKG	18.5B USD	14%
UK		DS Smith PLC LSE:SMDS	8B GBP	9%
IE	S	Smurfit Kappa Group PLC F:SK3	8.2B EUR	13%
US		Sealed Air Corp NYSE:SEE	6.2B USD	15%
CH		SIG Group AG SIX:SIGN	3.8B CHF	12%
US		Graphic Packaging Holding Co NYSE:GPK	4.6B USD	11%
BR	K	Klabin SA BOVESPA:KLBN4	22.9B BRL	15%

Avery Dennison Corp
Glance View

Economic Moat

None

Market Cap

14.2B USD

Industry

Packaging

Avery Dennison Corporation, a stalwart in the materials science and manufacturing sector, has elegantly woven its presence across the commercial landscape with its innovative products and strategic business acumen. The company, originally founded in 1935 as Avery Adhesives, has evolved into a global player by mastering the art of pressure-sensitive adhesive materials, a core technology that serves as the backbone for their diverse product lineup. At the heart of Avery Dennison's operations are its two key segments: Label and Graphic Materials, and Retail Branding and Information Solutions. The former generates the lion’s share of revenue by providing essential services and products such as labeling, packaging, and graphics films, which cater to industries ranging from consumer goods to automotive. Meanwhile, the Retail Branding and Information Solutions branch offers enticing avenues for growth as it pioneers intelligent labels and RFID systems that enhance retail operations by enabling inventory accuracy and supply chain visibility. Their success story pivots not just on their capability to develop high-performance materials but also on their strategic acquisitions and relentless pursuit of innovation. The company's acquisition-driven strategy supports their expansion into new markets and technologies, while their commitment to sustainability forms a pillar of their long-term growth strategy. Avery Dennison has sharpened its competitive edge by not only developing recyclable products but also by moving towards sustainable manufacturing processes. This dual approach enables them to cater to clients’ growing demand for sustainability while maintaining robust financial performance. Through these endeavors, Avery Dennison has crafted a business model that harmonizes traditional manufacturing prowess with modern consumer needs, thus securing its position as a profitable and forward-thinking entity in the global market landscape.

View AVY Analysis

AVY Intrinsic Value

What is Intrinsic Value?

Economic Moat is a concept popularized by Warren Buffett to describe a company's durable competitive advantage. It represents the 'moat' that protects a company from competitors and helps it sustain profitability over the long term. Our analysis of the past 10 years showed that companies with a wide economic moat significantly outperformed the market, delivering +645% returns compared to +189% for the S&P 500.

Our research into Economic Moat performance spans the past 10 years and focuses on companies with a wide economic moat. For this analysis, we calculated the average stock price returns of these companies, comparing them to the performance of the S&P 500 index over the same period.

The results were compelling: wide moat stocks achieved a remarkable +645% average return, compared to +188% for the broader market. This difference highlights the long-term benefits of investing in businesses that can maintain their market position and pricing power over time.

Note: This research does not account for survivorship bias. Past performance is not indicative of future results.

Determining whether a company has an economic moat requires both a deep dive into financial metrics and a qualitative assessment of its competitive position. Our analysts conduct a rigorous evaluation that focuses on identifying structural advantages that enable a company to sustain profitability and defend its market share over the long term.

The process begins with an analysis of a company’s historical financial performance. We assess how consistently the company has generated returns above its cost of capital and whether those returns have been stable or improving. However, financial performance alone doesn’t reveal the full picture. To understand the sources of these advantages, we evaluate five key drivers of economic moats:

Network Effect: We analyze whether the value of a company’s product or service grows as its user base expands. Platforms like payment systems or marketplaces benefit from this self-reinforcing.

Switching Costs: We assess whether customers face significant costs or disruptions when switching to a competitor’s product or service. High switching costs create customer stickiness and provide pricing power.

Intangible Assets: Strong brands, patents, and regulatory licenses can protect a company’s market position by creating barriers for competitors or enabling premium pricing. For example, a well-recognized consumer brand may command higher customer loyalty and margins.

Efficient scale: Occurs when a market is optimally served by one or a few players, making it unprofitable for new entrants to compete. This typically happens in industries with high fixed costs or geographic constraints, such as utilities or pipelines.

Cost Advantage: Companies with structural cost advantages can produce goods or services at a lower cost than their competitors, enabling them to offer competitive pricing or maintain higher margins. These advantages often arise from economies of scale, superior supply chain management, or proprietary technology. Firms like Walmart leverage their massive scale to negotiate better terms with suppliers, allowing them to undercut competitors on price.

By examining these factors in combination with a company’s financial performance and market positioning, we classify each company into one of three categories:

This rigorous evaluation ensures that our moat ratings are both comprehensive and reliable, giving investors the tools they need to make well-informed, long-term decisions.

The AI Assistant may sometimes provide inaccurate information.

Make your own investment decisions or consult a licensed financial advisor.

US	Johnson & Johnson NYSE:JNJ	Pharmaceuticals
US	Berkshire Hathaway Inc NYSE:BRK.A	Financial Services
US	Bank of America Corp NYSE:BAC	Banking
US	Mastercard Inc NYSE:MA	Technology
US	UnitedHealth Group Inc NYSE:UNH	Health Care
US	Exxon Mobil Corp NYSE:XOM	Energy
US	Pfizer Inc NYSE:PFE	Pharmaceuticals
US	Palantir Technologies Inc NYSE:PLTR	Technology
US	Nike Inc NYSE:NKE	Textiles, Apparel & Luxury Goods
US	Visa Inc NYSE:V	Technology
CN	Alibaba Group Holding Ltd NYSE:BABA	Retail
US	JPMorgan Chase & Co NYSE:JPM	Banking
US	Coca-Cola Co NYSE:KO	Beverages
US	Walmart Inc NYSE:WMT	Retail
US	Verizon Communications Inc NYSE:VZ	Telecommunication
US	Chevron Corp NYSE:CVX	Energy

	Johnson & Johnson NYSE:JNJ	US
	Berkshire Hathaway Inc NYSE:BRK.A	US
	Bank of America Corp NYSE:BAC	US
	Mastercard Inc NYSE:MA	US
	UnitedHealth Group Inc NYSE:UNH	US
	Exxon Mobil Corp NYSE:XOM	US
	Pfizer Inc NYSE:PFE	US
	Palantir Technologies Inc NYSE:PLTR	US
	Nike Inc NYSE:NKE	US
	Visa Inc NYSE:V	US
	Alibaba Group Holding Ltd NYSE:BABA	CN
	JPMorgan Chase & Co NYSE:JPM	US
	Coca-Cola Co NYSE:KO	US
	Walmart Inc NYSE:WMT	US
	Verizon Communications Inc NYSE:VZ	US
	Chevron Corp NYSE:CVX	US

	Johnson & Johnson NYSE:JNJ	211.58 USD 0.75%
	Berkshire Hathaway Inc NYSE:BRK.A	748 886.97 USD 0.85%
	Bank of America Corp NYSE:BAC	55.14 USD 1.06%
	Mastercard Inc NYSE:MA	571.93 USD 1.52%
	UnitedHealth Group Inc NYSE:UNH	341.84 USD 1.52%
	Exxon Mobil Corp NYSE:XOM	118.82 USD -0.6%

	Franklin Covey Co NYSE:FC	16.63 USD -0.12%
	Mohawk Industries Inc NYSE:MHK	112.49 USD -0.15%
	Ardmore Shipping Corp NYSE:ASC	11.14 USD -1.68%
	ASGN Inc NYSE:ASGN	48.07 USD 0.94%
	Skyworks Solutions Inc NASDAQ:SWKS	66.97 USD -1.88%
	Weatherford International PLC NASDAQ:WFRD	80.34 USD -1.07%

	Johnson & Johnson NYSE:JNJ	211.58 USD 0.75%
	Bank of America Corp NYSE:BAC	55.14 USD 1.06%
	Mastercard Inc NYSE:MA	571.93 USD 1.52%
	Salesforce Inc NYSE:CRM	262.23 USD -0.05%
	Abbvie Inc NYSE:ABBV	223.32 USD -0.29%
	Home Depot Inc NYSE:HD	359.65 USD 0.61%

Avery Dennison Corp
NYSE:AVY