Avery Dennison Earnings: Volumes Rise as Destocking Headwinds Ease and End Market Demand Improves

Narrow-moat-rated Avery Dennison reported solid fourth-quarter results that came with few surprises as the company closed out a challenging year. Organic sales for the full year fell almost 8% as inventory destocking weighed heavily on volumes, but the company was able to buck the trend in the fourth quarter, with organic sales rising 1.1% from a year ago due to a strong performance from the solutions group. We are encouraged by Avery’s fourth-quarter results and management’s belief that much of the inventory destocking headwinds are now behind the company, which should provide a runway for volume growth in 2024. As such, we've increased our fair value estimate to $154 from $151 per share due to higher near-term revenue in our forecast.