Avon Products, Inc. (AVP) Buy or Sell Stock Guide

Last updated: Sep 23, '17

The analysis below may be helpful to you if you have any of the following questions about AVP stock:

  • Is AVP a buy or a sell?
  • Should I sell or hold AVP stock today?
  • Is AVP a good buy / a good investment?
  • What are AVP analyst opinions, recommendations, ratings?

Here are AVP stock buy reasons/signals:

1. Enhancing the value provided to Avon's independent representatives (improving compensation and training and expanding its online tools) strikes us as a wise investment.

2. The firm's deal with Coty, whereby Avon's 1.6 million local reps will market select Coty fragrances in Brazil (Avon's largest market at about 20% of sales), could be extended to other regions or product segments.

3. Avon’s focus over the past year to take a more stringent look at its cost structure, particularly within its supply chain and underutilized global manufacturing network, strikes us as prudent.

4. AVP stock price ($2.45) is close to the 52-week low ($2.41). Perhaps now is a good time to buy?

5. AVP forward P/E ratio is 8.64, and it’s low compared to its industry peers’ P/E ratios.

6. AVP Price/Sales ratio is 0.19, and it’s low compared to its industry peers’ P/S ratios.

7. AVP PEG ratio (P/E adjusted for growth) is 0.18, and it’s low compared to its industry peers’ PEG ratios.

8. AVP average analyst price target ($3.93) is above its current price ($2.45).

Here are AVP stock sell reasons/signals:

1. We’ve long held concerns about Avon’s representative retention and engagement, with just 60% of its active representative base having been with the firm for more than 18 months.

2. Avon said that first-quarter sales in Russia slipped 10% in local currency, partly because of order delays that frustrated its sales representatives.

3. A portion of Avon’s bloated cost structure and lagging profits have resulted from the number of markets entered the past several decades (more than 50), and that it is not operationally hedged (with 30% of its SG&A in hard currencies but only 15% of sales).

4. AVP quarterly revenue growth was -2.70%, lower than the industry and sector average revenue growth (4.26% and 1.22%, respectively).

What are your thoughts on AVP?

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