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Things You Should Know Prior to Avon's (AVP) Q3 Earnings

Zacks Equity Research

Avon Products, Inc. AVP, which accepted the buyout offer from Natura, is slated to release third-quarter 2019 results on Oct 31.

The company has a mixed record of earnings surprise in the trailing four quarters, with a beat in the preceding two quarters. It delivered average positive earnings surprise of 84.4% in the last four quarters. Let’s see how things are shaping up for this announcement.

Which Way Are Estimates Headed?

The Zacks Consensus Estimate for Avon’s third-quarter earnings is pegged at 3 cents, indicating growth from the prior-year quarter’s reported figure. It recorded break-even results in the prior-year quarter. Notably, the consensus mark has been unchanged over the past 30 days.

Avon Products, Inc. Price and EPS Surprise

 

Avon Products, Inc. Price and EPS Surprise

Avon Products, Inc. price-eps-surprise | Avon Products, Inc. Quote

For quarterly revenues, the consensus estimate stands at $1,226 million, implying a decline of roughly 14% from the prior-year quarter’s reported figure.

Factors at Play

‘Open Up Avon’ initiative and cost-saving efforts are expected to get reflected in Avon’s bottom-line number. The company’s ‘Open Up Avon’ strategy focuses on direct selling business model, brand renovation and e-commerce expansion. Cost savings from supply-chain coupled with improved price/mix due to pricing efforts are likely to have cushioned operating margins.

Moreover, improvement of digital tools and e-commerce channel has been bolstering Average Representatives sales, a trend that most likely continued in the third quarter.

However, softness across the company’s Europe, Middle East & Africa segment, resulting from significant challenges in Russia and increased competition, are anticipated to get reflected in the company’s revenues.
 
Also, the impact of adverse currency fluctuation cannot be ignored.

The Zacks Consensus Estimate for quarterly revenues across the aforesaid segment is pinned at $417 million, which suggests a decline of 5.9% from the year-ago reported figure.  Moreover, the consensus estimate for quarterly revenues in South Latin America; and North Latin America segments currently stand at $492 million and $201 million, respectively, indicating declines of 23.7% and 2.9% on a year-over-year basis. Conversely, the revenue estimate for the Asia-Pacific segment is pegged at $124 million, suggesting growth of 2.5% year over year.

What Does the Zacks Model Say?

Our proven model does not conclusively predict an earnings beat for Avon this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Avon carries a Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult.
 
Stocks With Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to beat estimates:

e.l.f. Beauty, Inc. ELF has an Earnings ESP of +10.71%. It currently sports
a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Boston Beer Company, Inc SAM has an Earnings ESP of +4.18% and a Zacks Rank #2 at present.

Church & Dwight Co., Inc CHD presently has an Earnings ESP of +0.22% and a Zacks Rank #2.

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