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Nu Skin Enterprises, Inc. (NUS), Estee Lauder Companies Inc (EL), Avon Products, Inc. (AVP): Beauty Is Big Business for These Companies

Avon focused on cost reduction

Avon Products, Inc. (NYSE:AVP)’s first quarter results show adjusted net income of $112 million, or $0.26 per share, and a net loss of $13 million, or ($0.03) per share. Constant dollar revenue growth was up in its Latin America, Europe, Middle East, and Africa regions due to increases in average orders and/or an increase in active sales representatives. However, North America and Asia Pacific had revenue declines of 15% and 10%, respectively. Avon Products, Inc. (NYSE:AVP) was also negatively impacted by foreign currency devaluations and restructuring expenses.

Operating margin in all regions, except North America, rose mostly due to lower costs and expenses. The stock’s current price is fairly valued with a PEG ratio of 0.83 and a forward P/E of 16.82. Next year’s EPS is estimated at $1.38 and a 23% growth is expected over the next five years.

My Foolish conclusion

Nu Skin Enterprises, Inc. (NYSE:NUS) looks like good value with good growth prospects. However, the current slowdown in China’s economy could have a negative impact on the company’s results. Investors should look for signs of falling sales when the company reports second-quarter results next month. Estee Lauder Companies Inc (NYSE:EL), while overvalued, may provide more stable performance over the long-term.

Avon Products, Inc. (NYSE:AVP) is currently trying to dig itself out of a hole, with an underperforming North American segment and high debt levels (debt to equity is extremely high at 304). While S&P has a negative outlook on the stock, there’s positive market sentiment that Avon will continue to de-leverage and stabilize its margins.

Eileen Rojas has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article Beauty Is Big Business for These Companies originally appeared on and is written by Eileen Rojas.

Eileen is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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