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Here's Why Avon (AVP) Stock Is Out of Investors' Favor

Zacks Equity Research
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Avon Products Inc. AVP is no more in investors' good books, thanks to its dismal surprise trend. The company’s soft sales and earnings numbers have largely weighed on the stock’s performance. Its bleak prospects are evident from the recent fall in estimates and its Zacks Rank #4 (Sell).

Stock Continues to Decline

Shares of Avon have declined around 35.4% in the past month, significantly wider than the industry’s fall of 8.5%. Additionally, the stock has witnessed a downside of 24.8% since reporting soft first-quarter 2018 results on May 3.



Avon delivered in-line earnings in first-quarter 2018. However, the company lagged earnings estimates in eight of the last 11 quarters. Furthermore, it has an unimpressive top-line surprise trend, with a negative sales surprise in five of the trailing seven quarters. This dismal sales trend can be attributed to soft Representatives growth.

Avon Products, Inc. Price, Consensus and EPS Surprise

 

Avon Products, Inc. Price, Consensus and EPS Surprise | Avon Products, Inc. Quote

Estimates Decline

Following the dismal first quarter, the company’s estimates for the next quarter and full year witnessed a downtrend.

The Zacks Consensus Estimate moved downward in the last 30 days. Notably, estimates of 1 cent per share for the second quarter moved down by a penny. Additionally, the Zacks Consensus Estimate for 2018 declined from 18 cents per share to 13 cents while estimates for 2018 declined by 7 cents to 21 cents.

Soft Active Representatives Hurt Performance

Avon has been troubled by soft Active Representatives growth for the past several quarters. This has been a major hurdle in the company’s efforts to revive top and bottom lines. Notably, the top line was impacted by lower Active Representatives as well as challenges in key markets in the first quarter of 2018. Active Representatives declined 4%, driven by fall in South Latin America and North Latin America. Moreover, Ending Representatives dipped 1% on account of softness in South Latin America and North Latin America, offset by growth in Europe, Middle East & Africa.

Though management has been aggressively trying to boost Representatives, this might take some time.  Management anticipates the intensely competitive environment in Brazil to adversely impact pricing despite the improving economy.

Competition to Take a Toll

Avon faces intense competition from cosmetics products retailers in the domestic and international markets. Changing market trends and evolving consumer preferences might also weigh on the performance and hurt overall profits.

Forget Avon, Check These Stocks That Witnessed Positive Estimate Revisions

Inter Parfums Inc’s IPAR earnings estimates for full-year 2018 have increased by 3 cents to $1.60 per share in the last seven days while estimates for 2019 rose 5 cents to $1.82 per share. The fragrance and cosmetic products retailer currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Buckle Inc. BKE also witnessed positive estimates revisions for fiscal 2018 and 2019. The Zacks Consensus Estimate for fiscal 2018 has increased by 5 cents to $1.82 per share in the last seven days while estimates for fiscal 2019 moved up by 4 cents to $1.47 per share. The apparel retailer currently carries a Zacks Rank #1.

The first quarter and fiscal 2018 consensus marks for Dollar General Corp. DG have moved up by a penny each to $1.40 per share and $6.01 per share, respectively, in the last 30 days. This discount-store retailer carries a Zacks Rank #2 (Buy).

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Avon Products, Inc. (AVP) : Free Stock Analysis Report
 
Inter Parfums, Inc. (IPAR) : Free Stock Analysis Report
 
Buckle, Inc. (The) (BKE) : Free Stock Analysis Report
 
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