AVY
Avery Dennison Corporation
$175.06
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 109.9% above fair value
You pay
$175.06
Bear
$61.46
Fair
$83.41
Bull
$105.36
Bear
$61.46
-64.9%
$8.78 × 7x
Fair
$83.41
-52.4%
$8.78 × 10x
Bull
$105.36
-39.8%
$8.78 × 12x
Adjust Assumptions
9.5x
8.78$
Key Value Driver
Through-cycle normalized EPS ($8.78)
Implied Market Multiple
19.9x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (18 analysts)
$200.25
Divergence from AlphaVal
58%
Summary
Using 7-year normalized EPS of $8.78 at a 10x cycle multiple, the base-case value is $83.41 per share.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Wall Street's average price target is $200.25 (from 18 analysts). Our estimate is 58% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing