Contrasting Avery Dennison (NYSE:AVY) and Graphic Packaging (NYSE:GPK)

Graphic Packaging (NYSE:GPK) and Avery Dennison (NYSE:AVY) are both industrials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, dividends, earnings, profitability, risk and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Graphic Packaging and Avery Dennison, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Graphic Packaging	0	5	4	0	2.44
Avery Dennison	0	5	6	0	2.55

Graphic Packaging currently has a consensus target price of $26.38, indicating a potential upside of 22.73%. Avery Dennison has a consensus target price of $197.60, indicating a potential upside of 19.21%. Given Graphic Packaging’s higher probable upside, equities analysts plainly believe Graphic Packaging is more favorable than Avery Dennison.

Volatility & Risk

Graphic Packaging has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500. Comparatively, Avery Dennison has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500.

Profitability

This table compares Graphic Packaging and Avery Dennison’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Graphic Packaging	6.18%	21.13%	5.74%
Avery Dennison	8.14%	33.14%	8.91%

Insider and Institutional Ownership

99.7% of Graphic Packaging shares are held by institutional investors. Comparatively, 94.2% of Avery Dennison shares are held by institutional investors. 1.4% of Graphic Packaging shares are held by insiders. Comparatively, 0.8% of Avery Dennison shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Graphic Packaging pays an annual dividend of $0.44 per share and has a dividend yield of 2.0%. Avery Dennison pays an annual dividend of $3.76 per share and has a dividend yield of 2.3%. Graphic Packaging pays out 24.9% of its earnings in the form of a dividend. Avery Dennison pays out 42.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Graphic Packaging has raised its dividend for 1 consecutive years and Avery Dennison has raised its dividend for 15 consecutive years. Avery Dennison is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Graphic Packaging and Avery Dennison”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Graphic Packaging	$8.81 billion	0.72	$658.00 million	$1.77	12.14
Avery Dennison	$8.76 billion	1.48	$704.90 million	$8.91	18.60

Avery Dennison has lower revenue, but higher earnings than Graphic Packaging. Graphic Packaging is trading at a lower price-to-earnings ratio than Avery Dennison, indicating that it is currently the more affordable of the two stocks.

Summary

Avery Dennison beats Graphic Packaging on 12 of the 17 factors compared between the two stocks.

About Graphic Packaging

Graphic Packaging Holding Company, together with its subsidiaries, designs, produces, and sells consumer packaging products to brands in food, beverage, foodservice, household, and other consumer products. It operates through three segments: Paperboard Manufacturing, Americas Paperboard Packaging, and Europe Paperboard Packaging. The company offers unbleached, bleached, and recycled paperboard to various paperboard packaging converters and brokers. It also provides paperboard packaging products for consumer packaged goods companies; and cups, lids, and food containers for foodservice companies and quick-service restaurants serving the food, beverage, and consumer product markets, including healthcare and beauty. The company also designs, manufactures, and installs specialized packaging machines. The company sells its products through sales offices, as well as through broker arrangements with third parties in the Americas, Europe, and the Asia Pacific. Graphic Packaging Holding Company was incorporated in 2007 and is headquartered in Atlanta, Georgia.

About Avery Dennison

Avery Dennison Corporation operates as a materials science and digital identification solutions company in the United States, Europe, the Middle East, North Africa, Asia, Latin, America, and internationally. It provides pressure-sensitive materials comprising papers, plastic films, metal foils, and fabrics; performance tapes products, including tapes for wire harnessing, as well as cable wrapping for automotive, electrical, and general industrial applications; mechanical fasteners, which are precision-extruded and injection-molded plastic devices used in various automotive, general industrial, and retail applications; and other pressure-sensitive adhesive-based materials and converted products under the Fasson, JAC, Yongle, and Avery Dennison brands. The company also offers graphics and reflective products for the architectural, commercial sign, digital printing, and other related market segments; durable cast and reflective films to the construction, automotive, and fleet transportation market segments; reflective films for traffic and safety applications; and pressure-sensitive vinyl and specialty materials designed for digital imaging, screen printing, and sign cutting applications under the Avery Dennison and Mactac brand names. In addition, it provides branding solutions include brand embellishments, graphic tickets, tags, and labels, and sustainable packaging; and information solutions include item-level RFID, visibility and loss prevention, price ticketing and marking, productivity and media solutions, and brand protection and security solutions, as well as care, content, and country of origin compliance solutions. It serves home and personal care, apparel, e-commerce, logistics, food and grocery, pharmaceuticals, and automotive industries. The company was formerly known as Avery International Corporation and changed its name to Avery Dennison Corporation in 1990. Avery Dennison Corporation was founded in 1935 and is headquartered in Mentor, Ohio.