Rating Change #4

Avon Products Inc ( AVP) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Net operating cash flow has increased to $421.60 million or 15.82% when compared to the same quarter last year. Despite an increase in cash flow, AVON PRODUCTS's average is still marginally south of the industry average growth rate of 16.49%.
  • The gross profit margin for AVON PRODUCTS is rather high; currently it is at 63.40%. 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 0.00% significantly underperformed when compared to the industry average.
  • AVON PRODUCTS has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, AVON PRODUCTS reported lower earnings of $1.20 versus $1.36 in the prior year. This year, the market expects an improvement in earnings ($1.49 versus $1.20).
  • AVP, with its decline in revenue, slightly underperformed the industry average of 1.0%. Since the same quarter one year prior, revenues slightly dropped by 4.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

Avon Products, Inc. manufactures and markets beauty and related products worldwide. The company has a P/E ratio of 19.6, above the average consumer non-durables industry P/E ratio of 19.2 and above the S&P 500 P/E ratio of 17.7. Avon has a market cap of $9.16 billion and is part of the consumer goods sector and consumer non-durables industry. Shares are up 31.8% year to date as of the close of trading on Tuesday.

You can view the full Avon Ratings Report or get investment ideas from our investment research center.

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