Avon Products, Inc. (AVP) Might Reach $25 In Two Years – Revlon Inc (REV), Tupperware Brands Corporation (TUP)

Peer Comparison

According to Rogers, Avon’s current problems in several markets were fixable. Tupperware Brands Corporation (NYSE:TUP) also had some problems several years ago, but a new management team came in and fixed those problems. After that, the market recognized the business improvements and drove its share price up. At the current price of $77.50 per share, Tupperware is worth $4.3 billion on the market. It is valued at 21.5 times trailing earnings and 10.7x EV/EBITDA. Avon is valued a bit more expensive at nearly 11.8x EV/EBITDA.  As Avon had a negative net income in 2012, the P/E ratio is not valid.

Revlon Inc (NYSE:REV) is the smallest company among the three. It is trading at $21.23 per share, with a total market cap of $1.1 billion. It also seems to have the cheapest valuation, at 9.2x EV/EBITDA. Among the three, Avon had the lowest operating margin at 6%, while the operating margins of Tupperware and Revlon were both 15%. Revlon has not been paying investors any dividends, whereas Avon is paying the highest dividend yield at 3.7%. Tupperware is paying a 1.9% dividend yield to its shareholders.

Foolish Bottom Line

Avon seems to be an opportunistic stock for long-term investors. By buying Avon, investors are betting on new management’s ability to bring the business back to its historical high profitability.

The article Avon Might Reach $25 In Two Years originally appeared on Fool.com and is written by Anh HOANG.

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