Will Avon Products (AVP) Miss on Earnings This Quarter? - Analyst Blog

Avon Products Inc. (AVP), leading manufacturer and marketer of beauty and related products, is slated to report its third-quarter 2014 results on Oct 30. In the last quarter, the company had delivered a negative earnings surprise of 4.76%. Let's see how things are shaping up for this announcement.

Factors Influencing This Quarter

Avon Products has been in troubled waters due to continuous loss of active representatives, declining volumes, unfavorable exchange rates and reducing margins in mature markets like North America. This has led to the company's distressed operating results over the past few quarters.

Also, the company is facing continued macroeconomic headwinds owing to which we remain cautious of its performance this quarter. Although the company is striving to revive its business through strategic initiatives that were formulated in Nov 2012, we believe that it will take time for these initiatives to turn around operating performance.

Earnings Whispers?

Our proven model shows that Avon Products is likely to miss earnings estimates this quarter. This is because the stock has a negative Earnings ESP and a Zacks Rank #5

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at -6.25%. This is because the Most Accurate Estimate of 15 cents stands below the Zacks Consensus Estimate of 16 cents.

Zacks Rank: Avon Products carries a Zacks Rank #5 (Strong Sell) that decreases the predictive power of earnings beat. We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Best Buy Co., Inc. (BBY) has an Earnings ESP of +4.17% and a Zacks Rank #2 (Buy).

The Kroger Co. (KR) has an Earnings ESP of +3.28% and a Zacks Rank #2.

L Brands, Inc. (LB) has an Earnings ESP of +3.13% and a Zacks Rank #2.