Avon (NYSE: AVP) delivered not a bag of cosmetics to Wall Street, but a batch of growing earnings. Total revenues for the first quarter were up beautifully, rising 14% to $2.5 billion. Earnings per diluted share likewise did the double-digit-increase dance, rocketing 26% to $0.43.
Now, I would have liked the report a lot more if the company had indicated in its cash flow statement that everything was positive -- unfortunately, that was not to be, as operational cash flow was, in fact, negative. Avon needed to use $41 million for its operating activities during the quarter. Well, one thing I can say is that it's a lot less than the cash needed to fund last year's operations -- Avon burned through over $160 million in the comparable period. A check of the latest 10K shows that, while operational cash flow has been decreasing over the last few years, it has remained positive, so since this is the first quarter of the new fiscal year, we can wait to see how cash flow shapes up as the quarters go by.
Avon competes with companies like Procter & Gamble (NYSE: PG), Revlon (NYSE: REV) and Estee Lauder (NYSE: EL). As I've stated in the past, Procter & Gamble is more my kind of consumer-products business, but I'll give Avon its due since it does have a good product portfolio backing its brand and a devoted base of users. The stock is not too far off from its 52-week high as of this writing, and so long as it can keep sales growing and fight inflationary pressures, it should be a decent long-term bet.
Disclosure: I don't own shares in any of the companies mentioned; positions can change at any time.
Revlon (NYSE: REV) issued a press release concerning its plans for a reverse split as well as some preliminary quarterly results. The reverse split will be based on a 1-for-10 ratio. Well, the company may increase the share price via this method, but it won't make much of a difference in terms of Revlon's potential as an investment.
The stock closed on Friday at $0.99 per share. Let me repeat this -- the stock closed on Friday at $0.99. We are thus talking about a highly speculative equity. Interestingly, if you take a look at the preliminary results, you might believe that Revlon is on the right path. Revlon's management expects a slight dip in terms of net revenues -- the top line will see about $320 million in the quarter versus nearly $329 million in the year-ago period. There will be a net loss of about $5 million this time around versus a net loss of over $35 million last year. Doesn't sound so bad, I suppose, especially when you consider that operating income should come in at $30 million -- that's ten times better than 2007's first quarter. So, would I buy Revlon?
No. I actually owned Revlon stock a few years ago, and I think I essentially broke even when I decided to get the heck out. Revlon has a long way to go before proving to me that it's got a handle on all its problems and that it can get its brand equity back on track. And this reverse stock split means nothing to me, as it doesn't alter the underlying fundamentals. Revlon faces tough competition from other brands, such as Avon (NYSE: AVP), Estee Lauder (NYSE: EL), and products from Procter & Gamble (NYSE: PG), so the company has its work cut out for it.
Disclosure: I don't own shares in any of the companies mentioned here; positions can change at any time.
Here are highlights of some other earnings reports from Thursday:
Gap Inc. (NYSE: GPS) reported a 21% increase in its fourth-quarter profit year over year. The $265 million, or 35 cents per share, matched analysts' expectations. Revenue totaled $4.68 billion, down 5% from the previous year.
Kohls Corp. (NYSE: KSS) fourth-quarter profit fell about 15% year over year to $411.7 million, or $1.31 per share, just beating analysts' estimates. Sales rose less than 1% $5.49 billion, but same-store sales fell.
Novell Inc. (NASDAQ: NOVL) swung to a profit in its fiscal first quarter: $16.8 million, or 5 cents per share, matching expectations. Revenue rose to $230.9 million from $218.4 million a year ago.
As the leveraged buyout market (LBO) tightens amid the backdrop of more expensive debt, deal makers are looking to ride new investment vehicles to make their minions money.
We've seen a surge in popularity in what's called a "Special Purpose Acquisition Company," or SPAC. Bloomberg had a good article this morning on advent of the SPAC and what's happening in the industry as a whole. These companies, also called blank-check companies, are IPO'd after raising their funds. Once public, the founding management team needs to make an acquisition in a given time-frame. Shareholders decide on an individual basis whether they like the deal or not. If they like it, great. If not, they tender their shares and receive their money back.
Essentially, it's a hedged bet on management that their industry expertise will lead to a smart acquisition.
Bloomberg says that since the start of 2003, 144 blank-check companies have sold shares, raising $18.1 billion, with 13 of the deals coming before 2005, according to SPAC Analytics.
Revlon (NYSE: REV) is changing hands at $1.15 in early trading. That's up 10%.
The big rise does not keep the cosmetics company from being one of the most mismanaged public companies going.
In the quarter, revenue grew to $349.2 million from $321.1 million. The company's net loss was $11.3 million, or $0.02 per diluted share, compared to a net loss of $87.1 million, or $0.20 per diluted share.
All of the earnings figures were the good news. The company quoted ACNielsen statistics to show that it market share was down across most of its brands.
Because the company did a bit better than expected, its share are getting a bit of a goose.
Over the last five years, Revlon's share price is down 70%. The shareholders are probably out of sorts, but let them eat lipstick.
This morning Revlon Inc (NYSE: REV) reported their first quarter earnings and the company put up some pretty nice numbers. Revlon matched analyst estimates for the quarter with -$0.07 per share and showed improvements in overall sales as their restructuring plan is moving along as planned.
The company is going to be hosting a conference call starting at 9:30 AM EDT this morning and I am going to be liveblogging the call in its entirety so be sure to refresh your page frequently for up to the minute details on the call.
9:20am- Listening to a little soft music and getting ready for today's call. The call should be getting under way in about 10 minutes.
9:25am- This morning's call should be getting started in about 5 minutes from now. Currently the stock is trading up 4.6% in the premarket. We will periodically check in on the current price through the call and see how traders are reacting to what they are hearing.
9:32am- Still waiting.. seems to be getting a little bit of a late start. Announcer just came on the line to say that the call will start shortly. Stock is trading up 3.1% 3 minutes into the trading session.
9:37am- Finally getting started here. Abby Goldstein going over some compliance issues and getting us started
9:39am- David Kennedy getting us started - going over the numbers: Net revenues of $328 million, up slightly from $325.5 million. Earnings came in at a loss of $35.2 million which as a good improvement from $58.2 million last year first quarter.
Going into today's first quarter announcement, analysts had been expecting to see the company show a quarterly loss of 7 cents per share -- what Revlon wound up with. This is exactly the sort of news the cosmetic giant has been needing lately, and Wall Street is definitely rewarding it in early morning trading. With a little over an hour to go before today's opening bell, the stock has been pushed up 8.4% by pre-market traders.
While we never like to see a company show a loss, Revlon has been in the middle of a restructuring program that does seem to be having a positive effect, and that is what is really going to give traders a reason to buy up the stock today. The company was able to lower its overall costs during the quarter while at the same time increase its overall sales. Compared to the first quarter last year when Revlon showed a loss of $58.2 million, this current quarters loss of $35.2 million is a nice improvement.
Revlon Inc (NYSE: REV) is going to be releasing its first quarter numbers tomorrow morning. Analysts are expecting to see the cosmetic maker post a small loss for the quarter of -$0.07 (edited, originally posted stating est. was -0.01) per share when the numbers are released.
Last week we saw two of Revlon's competitors put up good earnings, so hopefully this is a good indicator that this could be the quarter for Revlon to break out of its recent tough times. On Thursday both Elizabeth Arden (NASDAQ: RDEN) and Lauder (Estee) Co (NYSE: EL) were able to see a nice move up in the market following their recent quarterly numbers.
If Revlon can follow the lead of ARDN and EL, the stock may finally be able to see some upside. REV is currently trading at $1.30 and has been stuck right around this level for the last nine months. The last three quarters Revlon has posted losses and the company could definitely use a dose of positive news to help it break out from its current range.
Last month Revlon added a couple of high-profile celebrities to its list of brand representatives. On April 20th the company announced that it had signed actress Beau Garrett, and then on the 23rd announced that it had added one of the hottest names in Hollywood, Jessica Alba, to the Revlon family. Garrett and Alba join a roster of elite celebrities that includes names such as Halle Berry, Sheryl Crow, and Eva Mendes.
The company will announce its earnings before the market opens tomorrow and will host a conference call starting at 9:30 AM EDT to discuss its quarterly results. We will be liveblogging tomorrow's conference call in its entirety, so join us tomorrow morning for complete coverage of the call.
Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer.
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Financial Pain Endures for Katrina Victims Financial calamities continue to afflict residents of Louisiana and Mississippi as they struggle to recover from the worst natural disaster in U.S. history. Debt is swelling and credit is suffering as residents deplete savings and take out loans to meet expenses. People of all income levels are affected, but the most desperate are those who had the least before Katrina hit. For Katrina victims, financial pain endures - USATODAY.com
Friday's jobs report showed 111,000 new jobs created and unemployment climbed from 4.5% to 4.6%. These may seem like contradictory numbers, more jobs and more unemployment, but it means more people entered the workforce. There was mildly bullish action in the markets today, with manufactured housing and residential construction up while diversified computer systems and copper weaker. Oil futures rose to $59 a barrel up almost $2.
Movers today included Revlon Inc (NYSE: REV) spiking up $0.18 (13%) to close at $1.49. Rackable Systems (NASDAQ:RACK) was tumbling $3.67 (-18%) to close at $16.69. Active stocks today include Oracle Corp. (NASDAQ:ORCL) up $0.37 (2.1%) to $17.42. Amazon.com Inc. (NASDAQ:AMZN) fell $1.31 (-3.3%) to $37.39 on four times normal volume.
The NYSE had volume of 2.5 billion shares traded with 1,891 issues advancing while 1,359 declined for a small loss of 2.45 points to close at 9,325.24. On the NASDAQ, 1.9 billion shares were traded, 1,645 stocks advanced and 1,360 declined for small gain of 7.50 to 2,475.88.
Companies start to believe their own PR hype. Investors push a stock past logical limits. A company seems about to break down or break out. These are just a few things that can signal a stock with attitude. And... that attitude can be good or bad for the stock price, since attitude always catches up with reality. At least on Wall Street, that is.
Colgate-Palmolive Co. (NYSE:CL) was up $0.71 (1.06%) yesterday to close at $67.42 on about three times its average volume. Investors bid up the stock after a solid earnings report before the open. The technicals for CL have been weakening lately but a continuation of the last two day's advances could change that. The company has an S&P 5 STAR (out of 5) strong buy rating. Out of the 14 other analysts who cover the stock, five give it a strong buy, one a moderate buy, and eight give it a hold. No sell ratings could be a good indicator for CL.
Jim Cramer, never one to rest on a single industry segment, discussed the quest for youthfulness tonight on his ever-popular MAD MONEY show.
If you want your body to look like a teenager's but your bank balance to scream "old fogey," Cramer advises that you avoid Bare Escentuals, Inc. (NASDAQ:BARE). He calls it a fad that isn't going anywhere, and says if you own it you should "ring the register." It was spun off by an LBO firm, but now it's too late; the company won't make you money. Cramer had regrets over this one: he didn't tell a caller on Friday to sell, and wished he had.
Better options if you want to capitalize on America's quest for eternal youth? Cramer likes Allergan, Inc. (NYSE:AGN) for its Botox and Medicis Pharmaceutical Corporation (NYSE:MRX) for its competing product. He counselled against the big, luxury names in the space: Avon Products Group (AVP), The Estee Lauder Co. (NYSE:EL) or Revlon, Inc. (NYSE:REV). Cosmetic companies are unreliable to Cramer.
Cramer did say International Flavors & Fragrances Inc. (NYSE:IFF) is a good alternative, even though it is close to a 52-week high. He thinks the company is much better with scents and steady end markets. Soon it will split into two businesses, he says, as it creates sweet ingredients that it sells to large companies like P&G. He said IFF only trades at 16x forward earnings and it has consistent 10% earnings growth. The best pick of the bunch? IFF, Cramer says.
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Revlon Inc
Friday's jobs report showed 111,000 new jobs created and unemployment climbed from 4.5% to 4.6%. These may seem like contradictory numbers, more jobs and more unemployment, but it means more people entered the workforce. There was mildly bullish action in the markets today, with manufactured housing and residential construction up while diversified computer systems and copper weaker. Oil futures rose to $59 a barrel up almost $2. 
Jim Cramer, never one to rest on a single industry segment, discussed the quest for youthfulness tonight on his ever-popular MAD MONEY show.
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