Avon Products (AVP) Stock Higher on Questionable Acquisition Offer

This story has been updated to include a statement from Avon.

NEW YORK (TheStreet) -- Shares of Avon Products (AVP) are higher by 5.47% to $7.03 in afternoon trading on Thursday, after the manufacturer and door-to-door seller of cosmetics and beauty related products clarified what can be described as an unusual situation in which PTG Capital Partners, a firm that may not be real, offered to acquire the company for $18.75 per share.

PTG Capital Partners announced the offer in a filing with the SEC

As it turns out, Avon has received no such offer and the alleged firm may not exist. 

Avon had no comment when contacted by TheStreet, however the company did release a statement on its website:

"In response to an SEC filing made by an entity purporting to be named "PTG Capital Partners," Avon reports that it has not received any offer or other communication from such an entity and has not been able to confirm that such an entity exists."

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Separately, TheStreet Ratings team rates AVON PRODUCTS as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate AVON PRODUCTS (AVP) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. 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 analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has significantly decreased to -$198.10 million or 75.93% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much 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 47.38%, 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 company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Personal Products industry average, but is greater than that of the S&P 500. The net income increased by 12.5% when compared to the same quarter one year prior, going from -$168.30 million to -$147.30 million.
  • AVP, with its decline in revenue, underperformed when compared the industry average of 9.2%. Since the same quarter one year prior, revenues fell by 17.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • AVON PRODUCTS has improved earnings per share by 13.2% 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 -$0.88 versus -$0.01 in the prior year. This year, the market expects an improvement in earnings ($0.31 versus -$0.88).
  • You can view the full analysis from the report here: AVP Ratings Report

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