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Avery Dennison - AI Stock Analysis

Analysis generated May 28, 2024

Avery Dennison Corporation (NYSE: AVY) is a global leader in labeling and packaging materials and solutions. Their product portfolio ranges from pressure-sensitive materials to various retail branding solutions, RFID inlays, and specialty chemicals. The company has a large market presence and an extensive reach which spans multiple industries globally. This makes Avery Dennison a diversified operational entity with a strong market position.

Fundamental Analysis

Let's delve into Avery Dennison’s recent financial performance. In the latest quarter, the company posted a revenue of $2.12 billion. This represents a quarter-over-quarter growth of 2.01%, which is an encouraging sign of growth amidst a competitive marketplace. Even more impressive, when compared to the same quarter last year, the revenue grew by 4.13%, indicating solid year-over-year growth.

The net income for the last quarter was $172 million, marking an increase of 20.48% compared to the previous quarter. Critically, this figure is 42.24% higher than the net income for the same quarter last year. These figures capture Avery Dennison’s efficient cost management and successful business operations.

EBITDA also showed substantial growth. At $285 million for the latest quarter, this metric increased by 12.63% from the previous quarter, and by an impressive 32.62% compared to the same quarter last year. EBITDA is a crucial measure of a company’s overall financial performance and Avery Dennison’s strong uptick here reflects robust operational health.

However, the current P/E ratio stands at 33.24, which is relatively high. A high P/E ratio could indicate that the stock is overvalued, suggesting a bearish outlook. Interestingly, we’ve also noticed some insider selling in the past couple of months. Insider selling might be a bearish signal, coming from the people who know the company best.

Technical Analysis

Today's stock price for Avery Dennison is $224.90, which is up by 2.68% compared to a month ago. Over the longer term, the stock price has increased a notable 40.39% compared to a year ago, depicting solid long-term growth. However, the current trend has turned bearish.

The 10-day Simple Moving Average (SMA10) is $227.08, slightly lower than the previous SMA10 of $227.22. This minor decline in the SMA could hint at a potential downturn in the stock price. Moreover, the Relative Strength Index (RSI) stands at 55.8—indicating a neutral condition. While not strongly bullish or bearish, the RSI is not signaling any imminent dramatic movements in either direction.

Alternative Data Analysis

Diving into alternative data, Avery Dennison has 376 open positions listed on popular job boards. This number is down by 8% in the last couple of months, hinting that the company might be trying to cut costs or improve margins. This might not be such a great sign for a growing company.

On the employee sentiment front, the business outlook among Avery Dennison employees is neutral. While not negative, it does not provide a clear bullish signal either.

A bullish trend can be found in customer acquisition. Avery Dennison’s website has seen an estimated 340,000 visitors, marking an increase of 56% over the past couple of months. This signifies a potentially higher engagement rate with their end consumers.

Regarding customer engagement, Avery Dennison has 61,000 Instagram followers, with no meaningful change in follower count in the past few months. Their Twitter account has 150,000 followers, also with no significant change in the count. This neutrality in social media growth signifies that, while there is no loss, there also aren't substantial gains in terms of social media-driven customer engagement.

AltIndex’s AI score for Avery Dennison stands at 55, which signals to hold. This composite score synthesizes fundamental, technical, and alternative data to offer an encompassing view considered by machine learning models.

Conclusion and Recommendation

Avery Dennison is showing promising signs with steady revenue, net income, and EBITDA growth. However, the high P/E ratio and insider selling could be potential red flags. Technical indicators currently point to a neutral to bearish short-term trend.

The alternative data reveals mixed signals—while there is a downturn in job postings that might suggest cost-cutting measures, the impressive increase in website visitors is encouraging. However, the stagnant figures in social media engagement and neutral employee sentiment indicate caution.

Given these mixed signals, the prudent recommendation here would be to hold Avery Dennison's stock. There are positive signs, but potential red flags necessitate a careful approach. Therefore, we align with AltIndex’s AI score, recommending a hold position for now.

Disclaimer: This AI stock analysis, generated by an experimental AI tool, is for informational purposes only and not financial advice. Information is based on publicly available data and may not always be accurate or current.