Why Did We Revise Avon’s Stock Price Upward By 25%?
We have recently revised Avon Products’ stock price upwards by 25% shortly after the company’s Q2 2016 earnings results. After taking several recovery measures post its persistent losses since 2011, Avon is gradually seeing some improvements in its performance. In terms of constant currency, Avon’s revenues were up by 5%, and each of the beauty and fragrance segment revenues grew by 5% Y-o-Y. The active representative base was up by 1% during the same period. Avon’s average order rose by 4% primarily due to the 7% increase in price mix. The company’s performance has started improving in its top ten markets, and it is collectively outperforming the overall growth of the rest of the company.
Towards the end of 2015, Avon decided to sell 80% of its loss making North American business to Cerberus Capital and received a total of $650 million investment from the latter. Since then, the company has also started implementing strategies to streamline operations and cut costs. In January, Avon announced a targeted cost saving to the tune of $350 million over the next three years. According to the company, plans to manage costs are going as per plans, and its representative training and retention program is gradually bearing fruit. Avon is also revising and customizing its pricing and product mix in several regions and that seems to be showing an improvement in sales.
Below we give a chart of our ‘old’ versus ‘new’ forecasts for some of the important parameters to judge Avon’s performance. We have upgraded our forecasts in view of Avon’s recovery momentum.
Have more questions about Avon Products (NYSE:AVP)? See the links below:
- What Is Avon’s Fundamental Value Based On 2016 Estimated Numbers?
- Revlon Versus Avon: How Do The Top Line And Bottom Lines Fare Currently?
- Why We’re Revising Our Price Estimate For Avon From $3 To $5?
- What Led To Avon’s Revenue And EBITDA Decline Over The Last Five Years?
- How Did Avon’s Different Segments Perform Over The Last 5 Years?
- What To Expect From Avon Products Q1 2016 Results?
- Avon Products Q1 2016 Results
- How Is Avon’s Financial Health And What Are The Implications?
- Will Avon Products Be Impacted By Brexit?
- How Do We See Avon Products’ Top Line Trending?
- How Is Avon Products’ Beauty Business Expected To Trend?
- Avon Products Q2 Results Suggest That The Company Might Be On Track For Recovery
- How Coty Benefits From Recent Divestment & Deleveraging Plans
- Synergies From The Avon-Natura Merger Could Unlock More Than $1 Billion In Value For Shareholders
- What Does The Avon-Natura Merger Deal Mean For Investors In Avon?
- A Closer Look At Avon’s Global Operations, And What’s In It For Natura
- Key Takeaways from Avon’s Q4 Earnings
- Will Representatives Growth Drive Avon’s Q4 Earnings?
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