Earnings Preview: Avon Products - Analyst Blog
26 July 2011 - 7:00PM
Zacks
Avon Products Inc.
(AVP) is scheduled to release its second-quarter 2011 results on
Thursday, July 28, 2011. The Zacks Consensus Estimate is 50 cents a
share for the second quarter of fiscal 2011. This represents a
year-over-year estimated growth rate of 4.2%.
Synopsis of
First Quarter 2011
Avon Products posted first-quarter
2011 adjusted earnings of 37 cents a share, which surpassed the
Zacks Consensus Estimate of 31 cents and increased 12.1% from the
year-ago figure of 33 cents a share.
On a reported basis, including
one-time items, earnings soared 230% to 33 cents per share from 10
cents per share in the year-ago quarter.
Total sales of the company rose
7.0% year over year to $2,629.1 million compared with $2,446.3
million a year ago. Total revenue also topped the Zacks Consensus
Estimate of $2,585.0 million.
Earnings
Guidance
Riding on the success of the first
quarter, the company hinted that strong field programs coupled with
an innovative pipeline should result in mid single-digit constant
dollar revenue growth in 2011. The company also anticipates 50–70
basis points of increase in operating margin.
Agreement of
Analysts
Over the last 30 days, 2 analysts
out of 14 moved their estimates in the upward direction with 1
analyst revising its estimates downward, for the first quarter of
fiscal 2011. The estimate for fiscals 2011 and 2012 follow the same
trend over the last 30 days. For the third quarter of fiscal 2011,
most of the analysts have positive outlook as two analysts have
revised their estimates in upward direction in the last 30
days.
In the last 7 days, one of the
analysts has moved its estimates in upward direction, while not a
single analyst foresee any downward pressure in the first quarter
2011 result. The estimate for third-quarter 2011 and fiscals 2011
and 2012 follow the same trend over the last 7 days.
Magnitude of Estimate
Revisions
The magnitude of estimate revisions
for Avon Products depicts a neutral outlook for the upcoming second
and third quarter and fiscal 2011. Over the last 30 days, estimates
for the upcoming two quarters and fiscal 2011 have remained
unchanged at 50 cents, 48 cents and $2.08 per share, respectively.
However, for fiscal 2012, analysts have raised their estimates by a
penny to $2.32 per share.
Earnings
Surprise
Considering earnings surprises, the
stock has not been steady over the last four quarters, with a mix
of positive and negative surprises ranging between a low of -12.8%
and a high of 19.4%. The average remained at 0.33%.
Our
Recommendation
Avon Products is a leading global
beauty company, and the world's largest direct seller of beauty and
related products. Therefore, the company targets women consumers in
over 100 countries through 6.2 million independent sales
representatives. Avon Products also derives a substantial portion
of its revenue from high-growth emerging markets, which offer a
significant future upside potential.
Avon is in the midst of a
multi-year restructuring program that primarily accelerates
investments toward targeted growth opportunities, streamlines
worldwide manufacturing operations, improves cost effectiveness of
administrative operations and enhances organizational
effectiveness. The restructuring program is expected to deliver
annualized savings of more than $430 million when fully implemented
by 2012.
On the other hand, Avon faces
competition across various products and product lines, both
domestically and internationally. The beauty and beauty-related
products industry is highly aggressive and the number of
competitors and degree of competition in this industry varies
widely from country to country.
Worldwide, Avon competes against
products sold to consumers by other direct-selling and direct-sales
companies and through the Internet and against products sold in the
mass market and through prestige retail channels. The company
competes head-to head with Revlon Inc. (REV).
Avon presently retains a Zacks #2
Rank, which translates into a short-term 'Buy' rating. Our
long-term recommendation on the stock remains 'Neutral'.
AVON PRODS INC (AVP): Free Stock Analysis Report
REVLON INC-A (REV): Free Stock Analysis Report
Zacks Investment Research
Avon Products (NYSE:AVP)
Historical Stock Chart
From Jun 2024 to Jul 2024
Avon Products (NYSE:AVP)
Historical Stock Chart
From Jul 2023 to Jul 2024