Corporate Evaluation Analysis - Avon Products

Only available on StudyMode
  • Download(s) : 178
  • Published : January 20, 2012
Open Document
Text Preview
Table of Contents
I. Company History……………………………………………………………………………………………..Pg.3 II. Recent News…………………………………………………………………………………………………Pg.5 III. Industry Analysis……………………………………………………………………………………………Pg.8 IV. SWOT Analysis……………………………………………………………………………………………..Pg.15 V. Value Line Analysis…………………………………………………………………………………………Pg.15 VI. Ratio Analysis………………………………………………………………………………………………Pg.18 VII. Regression & Descriptive Statistics – Growth Analysis………………………………………………Pg.20 VIII. Growth Analysis, Estimates for Earnings Employed in DDM, DDM including Discount Rate, and Other Assessments of Risk………………………………………………………………………………………….Pg.23 IX. Other Valuation Parameters………………………………………………………………………………Pg.26 X. Rule #1……………………………………………………………………………………………………….Pg.28 XI. Conclusions/Final Stock Judgment………………………………………………………………………Pg.31 XII. References…………………………………………………………………………………………………Pg.33 XIII. Appendix…………………………………………………………………………………………………..Pg.35

I. Company History
In general, Avon Products, Inc. is a U.S. cosmetics, perfume, jewelry, skin care, personal care and children’s products seller with markets in over 140 countries across the world and sales of $9.9 billion worldwide. Avon Founder David H. McConnell offered women a rarity in 19th century America: a chance at financial independence. In 1886, it was practically unheard of for a woman to run her own business. Only about 5 million women in the United States were working outside the home, let alone climbing the ranks of any corporate ladder. That number accounted for just 20% of all women (Avon.com). 

The man behind the company for women was the son of Irish immigrants and grew up on a farm. Yet, it was this young man from rural New York, a visionary leader decades ahead of his time, who would become a pioneer in empowering women. McConnell, a bookseller-turned-perfume entrepreneur, would offer women the opportunity to create and manage their own businesses through what later became known as direct selling. 

David H. McConnell sold books door-to-door and gave out perfume to entice women to buy his books. His perfume proved to be much more popular than his books, so he then founded the California Perfume Company (CPC) in New York, New York. Mrs. P.F.E Albee, a 50-year old wife and mother of two, became the California Perfume Company’s first Representative. The legendary Mrs. Albee is still considered a role model for Avon Representatives today and is credited with creating the company’s system for distributing products. The California Perfume Company was incorporated on January 28, 1916 by David H. McConnell and Alexander D. Henderson (businessman) in Suffern, New York. By 1918, five million units were sold in North America, and by 1928, sales reached $2 million. In October 1939, the name was changed to Avon Products, Inc; McConnell had visited Stratford-Upon-Avon (UK) and had liked the town so much, that he renamed his company after it. The company was taken public in 1946 with OTC stock. By 1954, sales reached $55 million, and the "Avon Calling" advertising campaign was introduced, making it one of the largest and most successful advertising campaigns in history (Avon.com). In the 1960’s and 1970’s, Avon was one of Wall Street’s favorite “Nifty Fifty” stocks, a group of well-regarded, “buy and hold” blue chips that also included Xerox, Disney, and McDonald’s. These stocks helped drive the bull market of the early 1970s in the U.S., with Avon’s stock soaring to $140. The Nifty Fifty bubble later bursts, sending U.S. stocks plunging. Avon was listed on the NYSE as AVP in 1964. By 1979, sales reached $3 billion, with one million direct sales agents. Today sales exceed $10 billion worldwide. In June 1989, Avon became the first major cosmetic company to announce a permanent end to animal testing on all Avon-manufactured products. Avon does not conduct animal testing on any of its products or raw ingredients and does not require that suppliers of raw...
tracking img