Avery Dennison’s 1Q26: Durable Growth, Clear Playbook, and a Quiet Up-tick in the EPS Dial

Executive snapshot

In the first quarter of 2026, AVY—Avery Dennison Corporation—delivered a respectable blend of sales momentum and margin discipline. The company reported EPS of $2.18 on a net sales print of about $2.3 billion, up roughly 7% year over year. On a non-GAAP basis, Adjusted EPS reached $2.47, rising about 7.4%. The revenue forecast and guidance for the next quarter point to continued earnings trajectory, even as currency effects and mix dynamics remain part of the ongoing calculus for the company and its sector peers.

Management framed the results as evidence of a resilient portfolio and a disciplined playbook focused on innovation, commercial execution, and cost management. As with many industrial-scale entrants, the challenge remains translating top-line strength into margin expansion in a world where inflation pressures and supply-chain dynamics persist. The release also notes non-GAAP reconciliations and cautions that comparisons are against the prior year in a quarter marked by dynamic demand patterns.

Guidance and near-term outlook

For the second quarter of 2026, Avery Dennison provided a revenue forecast and EPS guidance range: 2Q26 EPS guidance of $2.21 to $2.31, and Adjusted EPS guidance of $2.43 to $2.53. The press release emphasizes ongoing reconciliation of GAAP to non-GAAP figures, aligning expectations with a portfolio that should deliver growth even as inputs and currencies ebb and flow. Investors will want to compare these numbers against the EPS consensus as analysts model the quarter’s trajectory and seasonality alongside cross-segment mix.

First Quarter 2026 Results by Segment

The Materials Group was a bright spot within the quarter, with reported sales up 11.4% to about $1.6 billion. Adjusted for currency, the rise stood at roughly 3.6%, and organic growth was a solid 1.9%. Note the continued emphasis on pricing vs. volume: mid-single-digit volume/mix growth is cited as a lever offsetting deflationary price reductions in certain sub-categories. The group maintained a healthy operating margin, reported at about 14.9%, underscoring the margin discipline embedded in the quarter’s mix and cost actions.

Avery Dennison’s narrative across each segment remains consistent: robust top-line growth, disciplined cost control, and a focus on high-value categories where the company can defend pricing and sustain margin progression. The results, while supportive of ongoing capacity to fund strategic investments, also reflect the ongoing complexity of a global manufacturing footprint in a volatility-prone environment.

What it might portend for Avery Dennison and peers

Leaning into the revenue forecast for the upcoming quarter, the company seems to be testing a margin expansion narrative without sacrificing growth. The pronounced performance of the Materials Group suggests that the company’s diversified materials science and digital identification capabilities are leveraging pricing power and product mix, even as currency headwinds and inflationary pressures persist in the macro backdrop.

From a sector viewpoint, Avery’s emphasis on a 360-degree playbook—innovation, commercial excellence, and service-led differentiation—could serve as a blueprint for peers navigating similar cycles. The firm’s articulation of productivity gains, procurement discipline, and cost management indicates a portfolio strategy that aims to protect margins while funding ongoing investment in digital ID and materials science capabilities. In an environment where earnings surprises are increasingly scrutinized, the absence or presence of a surprise will hinge on how well the company translates top-line momentum into bottom-line improvement in the face of cross-currents like currency shifts and category mix shifts.

Analysts will be watching not just the top-line numbers, but the implied trajectory of margins, the pace of operating leverage, and how the company’s guidance compares with the evolving expectations for the broader packaging and specialty materials space. If AVY’s cadence holds—solid organic growth, modest ex-currency gains, and a well-defined plan to manage costs—the firm could set a tone for labeling, packaging, and identification players that the next few quarters won’t be a drag on profits even as the macro environment remains uncertain.

Risks and caveats to watch

• Currency movements remain a meaningful driver of reported results, and any sustained headwind could pressure the topline and margins.
• Pricing power vs. deflationary pressure varies by product line; sustained mix shifts matter for margin trajectory.
• Global supply-chain dynamics and input costs could test the company’s ability to maintain the pace of its non-GAAP reconciliation and the alignment between GAAP and non-GAAP results.

Bottom line

AVY’s 1Q26 release reads as a demonstration of a diversified, resilient business hitting its stride in a challenging year. The numbers—EPS of 2.18, Adjusted EPS of 2.47, and a 2Q26 EPS consensus-looking guidance range—underscore a company that can grow revenue while mindful of costs. The Materials Group’s double-digit sales surge, paired with a healthy margin, reinforces Avery Dennison’s positioning as a value-adding partner for brands and manufacturers navigating a complex global market.

For investors and sector peers, the question is whether this quarter’s momentum can be sustained in a context of currency volatility and inflationary pressures. If AVY keeps translating top-line strength into margin gains through its playbook—while delivering on its revenue forecast and EPS targets—the quarter’s quiet earnings narrative may become a louder signal about the durability of the company’s strategic bets in 2026 and beyond.