Earnings on Tap: Avon Products
The cosmetics company needs significant efforts to make up for the losses.
Market Update
Avon Products is slated to release first-quarter earnings before the market opens Tuesday, with analysts expecting the company to report decreased profits.
The consensus estimate for net income is $0.28 per share, down from diluted earnings of $0.33 per share in the same quarter a year ago.
Avon reported a loss of $400,000 in the last quarter of the previous fiscal year, snapping its three-quarter streak of earnings.
Earlier this month, the beauty-care firm appointed Sherilyn McCoy as its new CEO in a bid to resolve the host of issues confronting it, including the unsolicited $10 billion takeover offer from Coty. Apart from this, a daunting list of problems awaits McCoy: a shrinking salesforce (Avon ladies), prolonged investigations into charges of bribery of foreign officials, an SEC investigation into alleged leaked corporate information to Wall Street analysts, and dwindling sales amid soft consumer spending.
It is for these reasons that the focus of the first-quarter conference call is more likely to be on the new CEO and her strategies than on the earnings. Investors would like to know how McCoy plans to revive the beleaguered company.
Avon's stock has rallied more than 23% year to date, but it's still trading lower than Morningstar analyst Erin Lash's fair value estimate. However, given the uncertainty surrounding Avon's operations and the firm's current business review, Lash assigns a very high fair value uncertainty rating to the stock.