Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Avery Dennison Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 4.5% to 1.3% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 60, DPO 76, DIO 56). At a 8.0% WACC with mid-year discounting, the terminal value (79% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 12.7x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $173.09 per share, suggesting AVY is fairly valued by 2.2% at the current price of $169.36.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 1,017 | 1,055 | 1,095 | 1,110 | 1,124 | 1,152 |
| (−) Net Interest | 112 | 116 | 121 | 122 | 124 | 127 |
| (+) D&A | 247 | 245 | 240 | 240 | 256 | 262 |
| EBITDA | 1,376 | 1,417 | 1,456 | 1,472 | 1,504 | 1,541 |
| (−) Tax | 262 | 272 | 282 | 286 | 289 | — |
| (−) CapEx | 264 | 274 | 284 | 288 | 291 | — |
| (−) ΔWC | -62 | 43 | 46 | 16 | 16 | — |
| Free Cash Flow (FCF) | 913 | 828 | 845 | 882 | 906 | — |
| Peers' EBITDA Multiple | 12.7x | |||||
| Terminal Value | 19,573 | |||||
| WACC / Discount Rate | 8.03% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 878 | 738 | 696 | 673 | 640 | 13,304 |
| Enterprise Value | 16,930 | |||||
| Projection Period | 3,626 | 21.4% | ||||
| Terminal Value | 13,304 | 78.6% | ||||
| (−) Current Net Debt | 3,530 | |||||
| Equity Value | 13,400 | |||||
| (÷) Outstanding Shares | 77M | |||||
| Fair Price | $173 | +2.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 8.7x | 10.7x | 12.7x | 14.7x | 16.7x |
|---|---|---|---|---|---|
| 6.0% | $133 | $162 | $192 | $222 | $251 |
| 7.0% | $126 | $154 | $182 | $211 | $239 |
| 8.0% | $119 | $146 | $173 | $200 | $227 |
| 9.0% | $113 | $139 | $164 | $190 | $216 |
| 10.0% | $107 | $131 | $156 | $181 | $205 |
Current price: $169.36. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.