We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
What's in Store for Avon (AVP) When it Reports Q1 Earnings?
Read MoreHide Full Article
Avon Products Inc. is scheduled to report first-quarter 2017 results before the bell on May 4. The big question facing investors now is whether this global beauty retailer will be able to deliver a positive earnings surprise in the quarter to be reported.
Last quarter, the company reported a negative earnings surprise of 88.9%. In the trailing four quarters, Avon missed the Zacks Consensus Estimate significantly by an average of 109.7%. Further, the company underperformed the Zacks Consensus Estimate in three of the trailing four quarters. Let’s see how things are shaping up for this announcement.
The difficult times seem to be never ending for Avon as the company’s dismal top-line and bottom-line performances have become the order of the day. This dismal trend has also largely weighed down the stock price. Shares of Avon have declined 28.3% in the last six months, underperforming the Zacks categorized Cosmetics industry’s fall of nearly 16.5%.
The stock is in doldrums due to Avon’s strained earnings and revenues, which continue to be hurt by lack of growth in Active Representatives and currency headwinds. While Active Representatives dipped 3% in the last reported quarter, adverse currency fluctuations impacted sales and dragged down adjusted operating margin by 100 basis points and earnings by 2 cents per share. Additionally, the company anticipates results in 2017 to be persistently impacted by currency headwinds.
Further, a look at Avon’s earnings estimates revisions shows that the Zacks Consensus Estimate for the first quarter has remained stable for 30 days. However, the Zacks Consensus Estimate of break-even earnings compares favorably with the reported loss per share of 7 cents in the year-ago period. Analysts polled by Zacks expect revenues of $1.33 billion for first-quarter 2017, reflecting a 1.86% growth from the year-ago quarter.
Though the company’s surprise trend is yet to recover, we believe optimism is creeping into Avon’s performance on account of the progress on Transformation Plan, announced in Jan 2016.
With its Transformation Plan, the company targets bringing down costs over the long term and investing these savings back into growth initiatives like media, IT systems and social selling. Additionally, it anticipates this plan to help attain long-term goal of delivering low-double digit operating margin and constant-dollar revenue growth in the mid-single digits.
Earnings Whispers
Our proven model does not conclusively show that Avon is likely to beat 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:
Zacks ESP: Earnings ESP for Avon is currently 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Avon carries a Zacks Rank #2 (Buy) which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:
Pinnacle Foods Inc. , scheduled to report earnings on Apr 27, currently has an Earnings ESP of +2.17% and a Zacks Rank #2.
Lowe's Companies, Inc. (LOW - Free Report) , slated to release earnings on May 24, currently has an Earnings ESP of +2.86% and a Zacks Rank #2.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
What's in Store for Avon (AVP) When it Reports Q1 Earnings?
Avon Products Inc. is scheduled to report first-quarter 2017 results before the bell on May 4. The big question facing investors now is whether this global beauty retailer will be able to deliver a positive earnings surprise in the quarter to be reported.
Last quarter, the company reported a negative earnings surprise of 88.9%. In the trailing four quarters, Avon missed the Zacks Consensus Estimate significantly by an average of 109.7%. Further, the company underperformed the Zacks Consensus Estimate in three of the trailing four quarters. Let’s see how things are shaping up for this announcement.
Avon Products, Inc. Price and EPS Surprise
Avon Products, Inc. Price and EPS Surprise | Avon Products, Inc. Quote
Factors Influencing This Quarter
The difficult times seem to be never ending for Avon as the company’s dismal top-line and bottom-line performances have become the order of the day. This dismal trend has also largely weighed down the stock price. Shares of Avon have declined 28.3% in the last six months, underperforming the Zacks categorized Cosmetics industry’s fall of nearly 16.5%.
The stock is in doldrums due to Avon’s strained earnings and revenues, which continue to be hurt by lack of growth in Active Representatives and currency headwinds. While Active Representatives dipped 3% in the last reported quarter, adverse currency fluctuations impacted sales and dragged down adjusted operating margin by 100 basis points and earnings by 2 cents per share. Additionally, the company anticipates results in 2017 to be persistently impacted by currency headwinds.
Further, a look at Avon’s earnings estimates revisions shows that the Zacks Consensus Estimate for the first quarter has remained stable for 30 days. However, the Zacks Consensus Estimate of break-even earnings compares favorably with the reported loss per share of 7 cents in the year-ago period. Analysts polled by Zacks expect revenues of $1.33 billion for first-quarter 2017, reflecting a 1.86% growth from the year-ago quarter.
Though the company’s surprise trend is yet to recover, we believe optimism is creeping into Avon’s performance on account of the progress on Transformation Plan, announced in Jan 2016.
With its Transformation Plan, the company targets bringing down costs over the long term and investing these savings back into growth initiatives like media, IT systems and social selling. Additionally, it anticipates this plan to help attain long-term goal of delivering low-double digit operating margin and constant-dollar revenue growth in the mid-single digits.
Earnings Whispers
Our proven model does not conclusively show that Avon is likely to beat 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:
Zacks ESP: Earnings ESP for Avon is currently 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Avon carries a Zacks Rank #2 (Buy) which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:
Rocky Brands Inc. (RCKY - Free Report) , expected to release earnings on Apr 27, currently has an Earnings ESP of +77.78% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Pinnacle Foods Inc. , scheduled to report earnings on Apr 27, currently has an Earnings ESP of +2.17% and a Zacks Rank #2.
Lowe's Companies, Inc. (LOW - Free Report) , slated to release earnings on May 24, currently has an Earnings ESP of +2.86% and a Zacks Rank #2.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>