Trade-Ideas LLC identified

Avon Products

(

AVP

) as a "perilous reversal" (up big yesterday but down 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 $37.4 million.
  • AVP has traded 101,420 shares today.
  • AVP is down 4.5% today.
  • AVP was up 7.3% 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 5%. Currently there are 3 analysts that rate Avon Products a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Avon Products has been 8.7 million shares per day over the past 30 days. Avon has a market cap of $2.1 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 2.37 and a short float of 8.8% with 3.81 days to cover. Shares are up 19.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Avon Products as a

sell

. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • Net operating cash flow has decreased to $208.80 million or 10.76% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • AVP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 39.80%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • The revenue fell significantly faster than the industry average of 0.6%. Since the same quarter one year prior, revenues fell by 31.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for AVON PRODUCTS is rather high; currently it is at 59.52%. Regardless of AVP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AVP's net profit margin of -20.40% significantly underperformed when compared to the industry average.
  • AVON PRODUCTS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, AVON PRODUCTS reported poor results of -$1.80 versus -$0.88 in the prior year. This year, the market expects an improvement in earnings ($0.22 versus -$1.80).

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