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Avery Dennison (Avery Dennison) WACC % :9.77% (As of Apr. 27, 2024)


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What is Avery Dennison WACC %?

As of today (2024-04-27), Avery Dennison's weighted average cost of capital is 9.77%%. Avery Dennison's ROIC % is 10.82% (calculated using TTM income statement data). Avery Dennison generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.

For a comprehensive WACC calculation, please access the WACC Calculator.


Avery Dennison WACC % Historical Data

The historical data trend for Avery Dennison's WACC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Avery Dennison WACC % Chart

Avery Dennison Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
WACC %
Get a 7-Day Free Trial Premium Member Only Premium Member Only 9.35 5.69 6.11 7.89 9.13

Avery Dennison Quarterly Data
Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23 Mar24
WACC % Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 7.19 7.74 9.04 9.13 -

Competitive Comparison of Avery Dennison's WACC %

For the Packaging & Containers subindustry, Avery Dennison's WACC %, along with its competitors' market caps and WACC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Avery Dennison's WACC % Distribution in the Packaging & Containers Industry

For the Packaging & Containers industry and Consumer Cyclical sector, Avery Dennison's WACC % distribution charts can be found below:

* The bar in red indicates where Avery Dennison's WACC % falls into.



Avery Dennison WACC % Calculation

The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC is commonly referred to as the firm's cost of capital. Generally speaking, a company's assets are financed by debt and equity. WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances.

WACC=E/(E + D)*Cost of Equity+D/(E + D)*Cost of Debt*(1 - Tax Rate)

1. Weights:
Generally speaking, a company's assets are financed by debt and equity. We need to calculate the weight of equity and the weight of debt.
The market value of equity (E) is also called "Market Cap". As of today, Avery Dennison's market capitalization (E) is $17636.382 Mil.
The market value of debt is typically difficult to calculate, therefore, GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding the latest one-year quarterly average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together. As of Mar. 2024, Avery Dennison's latest one-year quarterly average Book Value of Debt (D) is $3380.58 Mil.
a) weight of equity = E / (E + D) = 17636.382 / (17636.382 + 3380.58) = 0.8391
b) weight of debt = D / (E + D) = 3380.58 / (17636.382 + 3380.58) = 0.1609

2. Cost of Equity:
GuruFocus uses Capital Asset Pricing Model (CAPM) to calculate the required rate of return. The formula is:
Cost of Equity = Risk-Free Rate of Return + Beta of Asset * (Expected Return of the Market - Risk-Free Rate of Return)
a) GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate. It is updated daily. The current risk-free rate is 4.663%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default.
b) Beta is the sensitivity of the expected excess asset returns to the expected excess market returns. Avery Dennison's beta is 1.08.
c) (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.
Cost of Equity = 4.663% + 1.08 * 6% = 11.143%

3. Cost of Debt:
GuruFocus uses latest TTM Interest Expense divided by the latest one-year quarterly average debt to get the simplified cost of debt.
As of Mar. 2024, Avery Dennison's interest expense (positive number) was $121.2 Mil. Its total Book Value of Debt (D) is $3380.58 Mil.
Cost of Debt = 121.2 / 3380.58 = 3.5852%.

4. Multiply by one minus TTM Tax Rate:
GuruFocus uses the most recent TTM Tax Expense divided by the most recent TTM Pre-Tax Income to calculate the tax rate. The calculated TTM tax rate is limited to between 0% and 100%. If the calculated tax rate is higher than 100%, it is set to 100%. If the calculated tax rate is less than 0%, it is set to 0%.
The latest calculated TTM Tax Rate = 206.6 / 760.8 = 27.16%.

Avery Dennison's Weighted Average Cost Of Capital (WACC) for Today is calculated as:

WACC=E / (E + D)*Cost of Equity+D / (E + D)*Cost of Debt*(1 - Tax Rate)
=0.8391*11.143%+0.1609*3.5852%*(1 - 27.16%)
=9.77%

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Avery Dennison  (NYSE:AVY) WACC % Explanation

Because it costs money to raise capital. A firm that generates higher ROIC % than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Avery Dennison's weighted average cost of capital is 9.77%%. Avery Dennison's ROIC % is 10.82% (calculated using TTM income statement data). Avery Dennison generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.


Be Aware

1. GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding latest one-year quarterly average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together.
For companies that report quarterly, GuruFocus combines all of the most recent year's quarterly debt data from the beginning of the year to the year-end and calculates the average.
For companies that report semi-annually, GuruFocus combines all of the most recent year's semi-annual debt data from the start of the year to the year-end and calculates the average.
For companies that report annually, GuruFocus combines the beginning and ending annual debt data from the most recent year and then calculates the average.

2. The WACC formula discussed above does not include Preferred Stock. Please adjust if preferred stock is considered.

3. (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.

4. GuruFocus uses the latest TTM Interest Expense divided by the latest one-year quarterly average debt to get the simplified cost of debt.


Related Terms

Avery Dennison (Avery Dennison) Business Description

Traded in Other Exchanges
Address
8080 Norton Parkway, Mentor, OH, USA, 44060
Avery Dennison manufactures pressure-sensitive materials, merchandise tags, and labels. The company also runs a specialty converting business that produces radio-frequency identification, or RFID, inlays and labels. Avery Dennison draws a significant amount of revenue from outside the United States, with international operations accounting for the majority of total sales.
Executives
Ignacio J Walker officer: VP and Chief Legal Officer 207 GOODE AVE, GLENDALE CA 91203
Divina Fe Santiago officer: VP Controller 8080 NORTON PARKWAY, MENTOR OH 44060
Julia A Stewart director 4551 WEST 107TH STREET STE 100, C/O APPLEBEES INTERNATIONAL INC, OVERLAND PARK KS 66207
Francisco Melo officer: President, Solutions Group 8080 NORTON PARKWAY, MENTOR OH 44060
Hassan Rmaile officer: President, Materials Group 1200 WILLOW LAKE BLVD, P.O. BOX 64683, ST. PAUL MN 55110
Andres Alberto Lopez director ONE MICHAEL OWENS WAY, PERRYSBURG OH 43551
Francesca Reverberi director C/O TRINSEO S.A., 1000 CHESTERBROOK BLVD., SUITE 300, BERWYN PA 19312
Anthony Anderson director 1100 N. WOOD DALE ROAD, WOOD DALE IL 60191
Martha N. Sullivan director 529 PLEASANT STREET, MS B-7, ATTLEBORO MA 02703
William Raymond Wagner director C/O VOCUS, INC., 4296 FORBES BOULEVARD, LANHAM MD 20706
Bradley A Alford director 150 N ORANGE GROVE BLVD, PASADENA CA 91103
Deena Baker-nel officer: VP & Chief HR Officer 207 GOODE AVE, GLENDALE CA 91203
Gregory Lovins officer: V.P. and Interim CFO 207 GOODE AVENUE, GLENDALE CA 91203
Ken C Hicks director 150 N. ORANGE GROVE BLVD, PASADENA CA 91103
Nicholas Colisto officer: VP & Chief Information Officer C/O AVERY DENNISON CORPORATION, 207 GOODE AVE, GLENDALE CA 91203

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