DCF Studio

    AVY · NYQ · Consumer Cyclical

    Avery Dennison Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 178.93

    Market price

    USD 187.01

    Implied upside

    -4.3%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    Value Per Share

    Perpetuity growth
    USD 178.93-4.3%
    Exit multiple
    USD 188.24+0.7%
    Market price
    USD 187.01

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 9.4bnUSD 9.6bnUSD 9.9bnUSD 10.2bnUSD 10.4bnUSD 10.7bnUSD 11.0bnUSD 11.3bnUSD 11.6bnUSD 11.9bn+2.6%
    EBITUSD 1.1bnUSD 1.2bnUSD 1.2bnUSD 1.2bnUSD 1.3bnUSD 1.3bnUSD 1.3bnUSD 1.4bnUSD 1.4bnUSD 1.4bn+2.6%
    NOPATUSD 904.8mUSD 929.8mUSD 955.2mUSD 980.9mUSD 1.0bnUSD 1.0bnUSD 1.1bnUSD 1.1bnUSD 1.1bnUSD 1.1bn+2.6%
    Add depreciation & amortisationUSD 329.7mUSD 338.8mUSD 348.0mUSD 357.4mUSD 366.9mUSD 376.6mUSD 386.4mUSD 396.3mUSD 406.3mUSD 416.5m+2.6%
    Less capital expenditureUSD -274.7mUSD -293.0mUSD -311.9mUSD -331.5mUSD -351.8mUSD -372.9mUSD -394.7mUSD -417.3mUSD -440.6mUSD -464.7m+6.0%
    Capex, % of revenue2.9%3.0%3.1%3.3%3.4%3.5%3.6%3.7%3.8%3.9%-
    Less increase in working capitalUSD -66.6mUSD -32.7mUSD -33.2mUSD -33.7mUSD -34.2mUSD -34.7mUSD -35.2mUSD -35.6mUSD -36.1mUSD -36.5m-6.5%
    Free cashflow to firmUSD 893.2mUSD 942.9mUSD 958.1mUSD 973.1mUSD 987.9mUSD 1.0bnUSD 1.0bnUSD 1.0bnUSD 1.0bnUSD 1.1bn+1.9%
    Discount factor0.96400.89570.83230.77340.71870.66780.62060.57660.53580.4979-
    Present valueUSD 861.0mUSD 844.6mUSD 797.5mUSD 752.6mUSD 710.0mUSD 669.5mUSD 631.0mUSD 594.5mUSD 559.8mUSD 526.9m-
    Present Value Of The ForecastUSD 6.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.850Reported 0.776, pulled toward 1.0 (Blume)
    Cost of equity8.49%Risk-free + beta x equity risk premium
    Cost of debt5.44%Risk-free + 55bp, the spread for a AA rating at 8.3x interest cover. Book interest / average debt was lower, at 3.9%.
    Market capitalisationUSD 14.2bn79.2% of capital
    Total debtUSD 3.7bn20.8% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC7.62%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 178.93

    60% of EV

    Forecast FCFF, final year
    USD 1.1bn
    Capex at depreciation, working capital in reinvestment
    USD 1.3bn
    Less reinvestment at g/ROIC (16.1% of NOPAT)
    USD -204.4m
    Capitalised
    USD 1.1bn
    ROIC (reported)
    15.5%
    Terminal value, undiscounted
    USD 21.3bn
    Terminal value, discounted
    USD 10.6bn
    Enterprise value
    USD 17.5bn
    Less net debt
    USD 3.5bn
    Equity value
    USD 14.0bn

    Exit at 12.2x EBITDA

    Value per shareUSD 188.24

    62% of EV

    Terminal value, undiscounted
    USD 22.7bn
    Terminal value, discounted
    USD 11.3bn
    Enterprise value
    USD 18.3bn
    Less net debt
    USD 3.5bn
    Equity value
    USD 14.7bn

    Spread between methods: 5%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.62%269.33289.71317.08355.43412.54
    6.62%208.33218.41231.25248.00270.55
    7.62%167.30172.49178.93187.02197.39
    8.62%137.83140.44143.67147.69152.71
    9.62%115.63116.80118.30120.18122.55

    Outlined: this model. Green text: above today's price of 187.01. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year-0.7%3.0%3.4%
    EBIT margin12.7%12.2%12.7%
    Discount rate-7.6%7.4%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.