2-Star Stocks Poised to Plunge: Avon Products?
Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, beauty products specialist Avon Products (NYS: AVP) has received a distressing two-star ranking.
With that in mind, let's take a closer look at Avon's business and see what CAPS investors are saying about the stock right now.
Avonfacts
Headquarters (founded) | New York (1886) |
Market Cap | $7.1 billion |
Industry | Personal products |
Trailing-12-Month Revenue | $11.0 billion |
Management | CEO Sherilyn McCoy (since May 2012) |
Return on Equity (average, past 3 years) | 35.8% |
Cash/Debt | $1.3 billion / $3.5 billion |
Dividend Yield | 5.7% |
Competitors | L'Oreal |
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 13% of the 420 members who have rated Avon believe the stock will underperform the S&P 500 going forward.
Earlier this week, one of those Fools, Realstromprophet, succinctly summed up the Avon bear case for our community:
Revolving debt is nearly 1 billion dollars short term, not to mention the 2.5 billion in long term debt.
Cash equivalents only 1.25 billion, Net income continues to decline from 2008, while the debt position remains largely the same.
Payout ratio is 159%, given the declining income and no improvement to debt, that is not going to last. When they start slashing the dividend, anyone that is attracted to the stock for that will be leaving. ...
I don't see anything on the long horizon that saves this company. They could get bought out, after losing a bunch more of their stock price. Steer clear. Why bother with an unstable dividend outlook and non grower in this environment?
If you want market-thumping returns, you need to protect your portfolio from any undue risk. Luckily, we've found another stock we are incredibly excited about -- excited enough to dub it "The Motley Fool's Top Stock for 2012." We have compiled a special free report for investors to uncover this stock today. The report is 100% free, but it won't be here forever, so click here to access it now.
Want to see how well (or not so well) the stocks in this series are performing? Follow theTrackPoisedToCAPS account.
The article 2-Star Stocks Poised to Plunge: Avon Products? originally appeared on Fool.com.
Fool contributorBrian Pacamparaowns no position in any of the companies mentioned. Try any of our Foolish newsletter servicesfree for 30 days.We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Fool'sdisclosure policyalways gets a perfect score.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
