AVP Avon Products Inc

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 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