By Mary-Lynn Cesar for Kapitall.
Weak consumer spending in the US brought down
L'Oreal's (OTCMKTS: LRLCY)
sales in the second quarter, causing the beauty giant to miss the
average analyst revenue estimate. The French company reported a
4.1% increase in like-for-like revenue last week, which was up from
the 3.5% seen in the previous quarter but short of the 4.4%
North America sales rose 2.8%, outpeforming the region's
first-quarter 1.2% growth but missing the 3.2% forecasted by
, L'Oreal's shares rose 0.8% in early trading following the
On Monday morning, a different kind of consumer goods company
beat revenue estimates, but instead of seeing a rise in shares,
Michael Kors's (
. The luxury apparel and accessories brand released its
first-quarter earnings this morning, reporting $919.2 million in
revenue and earnings of $0.91 per share compared to estimates of
$851.7 million in revenue and earnings of $0.81 per share. Yet
rising costs, declining margins
, and a significant increase in markdowns made investors nervous,
sending the stock down 5.57 points or 6.81% as of 11:50 AM EST.
The two different market reactions inspired us to take a closer
look at personal products stocks' revenue in the following
list. We chose that industry because of the difficulty L'Oreal has
encountered in selling its products in North America over the first
half of the year, which is a challenge that could also impact
revenue growth of other companies in the industry.
To begin, we created a group comprised of
personal products stocks reporting earnings this
. We then screened that group for stocks with
revenue estimates for the to-be-reported quarter that are
greater than revenue reported a year ago
. This eliminated all of the companies that analysts expect to see
a drop in sales.
Investor response to Michael Kors's weakening margins
led us to screen for stocks with
gross margins higher than the industry average on most
recent quarter (MRQ), annualized and trailing twelve month (
. Gross margin, which is expressed as a percentage, shows how much
profit a company earns off each dollar it makes in sales, after
subtracting production expenses. Operating costs, payroll, and
taxes are all examples of production expenses.
Gross margin is calculated by dividing gross profit by revenue.
And the higher the percentage, the more profit a company retains
from its revenue.
We were left with two personal products stocks on our list. Do
you think these companies will beat their revenue estimates while
maintaining above-average gross margins? Use this list as a
starting point for your own analysis, and let us know what you
think in the comments.
Click on the interactive chart to view data over
1. Estee Lauder Companies Inc.
): Engages in the manufacture, marketing, and sale of skin care,
makeup, fragrance, and hair care products worldwide. Market cap at
$26.37B, most recent closing price at $67.90. The average
analyst estimate for Estee Lauder's fourth-quarter revenue is $2.66
billion. The company reported $2.41 billion in revenue a year ago.
Estee Lauder's year-over-year revenue grew by 11.26% in the third
quarter of fiscal year 2014 vs. an industry average of 8.82%
growth. On a TTM basis, the company's revenue has grown by 6.22%
vs. an industry average of 8.51%. MRQ gross margin at 84.25% vs. an
industry average of 74.87%. TTM gross margin at 83.81% vs. an
industry average of 73.68%. Estée Lauder will report its
fourth-quarter fiscal year 2014 earnings on Friday, August
2. Nu Skin Enterprises Inc.
): Develops and distributes anti-aging personal care products and
nutritional supplements worldwide. Market cap at $4.93B, most
recent closing price at $84.0. The average analyst estimate for Nu
Skin's second-quarter revenue is $709.03 million. The company
reported $682.93 million in revenue a year ago. Nu Skin's
year-over-year revenue grew by 23.91% in the first quarter of 2014
vs. an industry average of 8.82% growth. On a TTM basis, the
company's revenue has grown by47.02% vs. an industry average of
8.51%. MRQ gross margin at 85.93% vs. an industry average of
74.87%. TTM gross margin at 85.40% vs. an industry average of
73.68%. Nu Skin will reports it second-quarter earnings on
Wednesday, August 6th.
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