Why Avon Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Avon Products were looking revitalized today, climbing as much as 20% after a strong earnings report.

So what: The beauty-products maker reversed a downward trend, growing volume by 2% and increasing its sales force by at least 1% over losing a number of sellers earlier in the year. Avon seemed to find success abroad even as North American sales continued to decline, falling by 12%, but sales in Brazil grew 10%, and in Russia revenue was up 3%. Adjusted per-share profit of $0.37 topped estimates by $0.10 and revenue was up 1% in constant dollars to $3 billion, in line with estimates.

Now what: Avon's bounce today is primarily the result of low expectations. Though EPS beat estimates, they were still down slightly from a year before, but new CEO Sheri McCoy, who came on in April, seems to be righting the ship and pointed to "signs of stabilization" in the quarter. Things may be looking up for Avon after the better-than-expected quarter, but I'd like to see some improvement in its home market before I get on board.

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The article Why Avon Shares Popped originally appeared on Fool.com.

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