Will Avon Products (AVP) Miss Earnings?


Avon Products Inc. (AVP), the global beauty company, is slated to report its fourth quarter and fiscal 2013 results on Feb 13, 2014. In the last quarter, it posted a negative earnings surprise of 26.3%. Let’s see how things are shaping up for this announcement.

Factors this Past Quarter

Avon Products’ third-quarter 2013 earnings missed estimates and slumped year over year mainly on the back of the ongoing macroeconomic woes and weak performance at some of the company’s segments, primarily North America. Top-line growth was impacted by weak performances in almost all regions including Latin America, North America and Asia-Pacific, whereas the top line remained flat in Europe, the Middle East and Africa. Moreover, the company continues to face challenges with regard to growth of active representatives, units sold and its Beauty Products and 7% decline Fashion & Home revenues.

Earnings Whispers?

Our proven model does not conclusively show that Avon Products is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, #2 or #3 for this to happen. This is not the case here, as you will see below.

Negative Zacks ESP: ESP (Expected Surprise Prediction) for Avon Products is -3.45%. This is because the Most Accurate estimate stands at 28 cents, while the Zacks Consensus Estimate is pegged at 29 cents.

Zacks Rank #4 (Sell): Avon Products’ Zacks Rank #4 when combined with a negative ESP makes surprise prediction difficult. We caution against stocks with a Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks that Warrant a Look

Here are some other companies you may want to consider as our model shows they have the right combination of elements:

Foot Locker Inc. (FL) has an Earnings ESP of +1.33% and a Zacks Rank #2 (Buy).

Finish Line Inc. (FINL) has an Earnings ESP of +1.18% and a Zacks Rank #2 (Buy).

The Home Depot Inc. (HD) has an Earnings ESP of +1.36% and a Zacks Rank #3 (Hold).

Read the Full Research Report on HD
Read the Full Research Report on AVP
Read the Full Research Report on FL
Read the Full Research Report on FINL

Zacks Investment Research

View Comments (1)