On Mar 19, Zacks Investment Research upgraded
Avon Products Inc
) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Avonhas been witnessing rising earnings estimates on the back
of better-than-expected fourth-quarter 2012 results. For the
first time the global beauty company's earnings per share
surpassed the Zacks Consensus Estimate after reporting
lower-than-expected earnings in 6 consecutive quarters. Moreover,
we believe that the company's strategic move toward improving the
health of the balance sheet through refinancing activities helped
induce an upward movement in the estimates.
On Feb 12, Avon posted fourth-quarter adjusted earnings of 37
cents per share, significantly beating the Zacks Consensus
Estimate of 27 cents. The company's total revenue of $2,999.1
million for the quarter also beat the Zacks Consensus Estimate of
Of late, Avon has been encountering challenges on various
fronts including declining top and bottom lines and
highly-leveraged balance sheet. In Nov 2012, Avon outlined some
strategic measures focused on accelerating the top-line growth,
trimming down costs and improving working capital. Management is
in the process of easing business issues and directing the
company toward the growth trajectory, while reviving its
competitive position among peers.
As part of its strategy, Avon slashed its quarterly dividend
by 6 cents to 23 cents per share and has set a target of bringing
down costs by $400 million through 2015. We believe that the
company's turnaround strategies are paying off, which is evident
from its recently released fourth-quarter 2012 operating results.
Moreover, Avon recently culminated its $2.5 billion worth of
refinancing activities, which is expected to provide financial
flexibility to support the company's turnaround strategies.
The Zacks Consensus Estimate for fiscal 2013 increased 10.9%
to $1.02 per share as most of the estimates were revised higher
over the last 60 days. Moreover, for fiscal 2013, the estimates
were revised higher over the same time frame, lifting the Zacks
Consensus Estimate by 19.1% to $1.31 per share.
Other Stocks to Consider
Besides Avon, other stocks in the soaps-cosmetics industry
that are currently performing well include
International Flavors & Fragrances Inc.
Nu Skin Enterprises Inc.
). All these companies carry a Zacks Rank #2 (Buy).
AVON PRODS INC (AVP): Free Stock Analysis
ESTEE LAUDER (EL): Free Stock Analysis Report
INTL F & F (IFF): Free Stock Analysis
NU SKIN ENTERP (NUS): Free Stock Analysis
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