Avon Products (AVP) Marked As A Dead Cat Bounce Stock
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.
Trade-Ideas LLC identified
(
) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Avon Products as such a stock due to the following factors:
- AVP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $120.2 million.
- AVP has traded 454,016 shares today.
- AVP is up 3% today.
- AVP was down 5.7% yesterday.
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More details on AVP:
Avon Products, Inc. manufactures and markets beauty and related products worldwide. The stock currently has a dividend yield of 3.1%. Currently there is 1 analyst that rates Avon Products a buy, 1 analyst rates it a sell, and 9 rate it a hold.
The average volume for Avon Products has been 12.0 million shares per day over the past 30 days. Avon has a market cap of $3.4 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 2.24 and a short float of 19.1% with 4.60 days to cover. Shares are down 22.5% year-to-date as of the close of trading on Monday.
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Analysis:
rates Avon Products as a
. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.
Highlights from the ratings report include:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Personal Products industry. The net income has significantly decreased by 378.6% when compared to the same quarter one year ago, falling from -$69.10 million to -$330.70 million.
- The debt-to-equity ratio is very high at 8.98 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, AVP maintains a poor quick ratio of 0.79, which illustrates the inability to avoid short-term cash problems.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Personal Products industry and the overall market, AVON PRODUCTS's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $234.00 million or 47.21% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 45.08%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 368.75% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full Avon Products Ratings Report.
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