) have lost much of its momentum, and yesterday this Zacks Rank
#5 (Strong Sell) stock hit a new 52-week low of $15.20. Though
the share price of this New York-based global beauty retailer has
been declining since the release of disappointing third-quarter
2013 results, we believe the recent fall is due to the new
challenges that multilevel-marketing companies having operations
in China are facing.
The Chinese government has recently begun an investigation on
Nu Skin Enterprises Inc.
) following claims by local newspaper,
(on Jan 15) that the company was operating an illegal pyramid
scheme in the country.
The news has not only affected the share price of Nu Skin but
also that of several other companies with the same distribution
model as investors feared that the investigation could extend to
these direct selling companies as well. Other companies that have
lost their market value drastically since the news include
USANA Health Sciences Inc.
After the news, Avon's shares have declined approximately
7.9%, while since the release of third-quarter results it has
Last quarter, the company reported dismal results with
adjusted earnings per share and revenues decreasing 22.2% and 7%,
respectively. The decline mainly resulted from the prevalent
macroeconomic headwinds and weak performance at some of the
company's segments, primarily North America.
Almost all the estimates were revised downward following the
company's weak third-quarter results. The Zacks Consensus
Estimate for fourth-quarter 2013 slipped 19.4% to 29 cents per
share over the last 90 days. For 2013, the Zacks Consensus
Estimate slipped 10.9% to 98 cents per share over the same time
The average volume of shares traded over the last three months
was approximately 4,566K. Moreover, Avon currently trades at a
forward P/FCF of 30.4x, a 46.2% premium to the peer group average
AVON PRODS INC (AVP): Free Stock Analysis
HERBALIFE LTD (HLF): Free Stock Analysis
NU SKIN ENTERP (NUS): Free Stock Analysis
USANA HLTH SCI (USNA): Free Stock Analysis
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