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How Did Avon Products Perform in 3Q16?

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Price movement

Avon Products (AVP) fell 10.4% to close at $5.94 per share during the first week of November 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -10.4%, -2.9%, and 46.7%, respectively, as of November 4.

AVP is trading 7.8% below its 20-day moving average, 0.45% below its 50-day moving average, and 28.1% above its 200-day moving average.

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Related ETF and peers

The Oppenheimer Mid-Cap Revenue (RWK) invests 0.75% of its holdings in Avon. The ETF tracks a revenue-weighted index of the S&P Mid Cap 400 Index. The YTD price movement of RWK was 5.7% on November 4.

The market caps of Avon Products’ competitors are as follows:

  • Colgate-Palmolive (CL) — $62.4 billion
  • Estée Lauder Companies (EL) — $29.7 billion

Performance of Avon Products in 3Q16

Avon Products reported 3Q16 total revenue of $1.41 billion, a fall of 2.1% compared to its total revenue of $1.44 billion in 3Q15. Sales of its Beauty and Fashion & Home categories fell 1.8% and 4.1%, respectively, in 3Q16 compared to 3Q15. The company’s gross profit margin fell 20 basis points, and its operating margin rose 480 basis points in 3Q16 compared to the prior year’s period.

Avon’s gross margin was negatively impacted by foreign exchange in the quarter. This negative impact was offset by a fall in its supply chain costs and inflationary and strategic pricing. The rise in its operating margin was due to its cost-saving initiatives and its price mix, which were offset by the negative impact of foreign exchange.

Avon’s net income and EPS (earnings per share) rose to $36.0 million and $0.07, respectively, in 3Q16, compared to -$697.0 million and -$1.58, respectively, in 3Q15. It reported adjusted EPS of $0.02 in 3Q16 compared to -$0.11 in 3Q15.

AVP’s cash and cash equivalents and inventories rose 31.3% and 13.2%, respectively, in 3Q16 compared to 4Q15. Its current ratio rose to 1.5x in 3Q16 compared to 1.1x in 4Q15.

Next, we’ll take a look at Edgewell Personal Care Company (EPC).

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