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Coty Inc (COTY)
:COTY
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Coty
(NYSE:COTY)57Neutral
Positive Factors
E-commerce performance
COTY's brands in both Prestige & Consumer Beauty are outperforming in the e-commerce channel and taking market share.
Innovation and investment
Management is focusing on innovation and investing more in their fast-growing brands and categories.
Negative Factors
China and Asia market challenges
Visibility remains low on recovery in China/Asia Travel Retail, which constitutes less than 10% of COTY's sales.
Inventory management challenges
Retailers have not replenished their inventories for prestige fragrance at the expected pace, reflecting tightening inventory management.
Coty (COTY) vs. S&P 500 (SPY)
Market Cap
$4.81B
Dividend YieldN/A
Average Volume (3M)8.17M
Price to Earnings (P/E)40.1
Beta (1Y)0.95
Revenue Growth1.35%
EPS Growth-99.94%
CountryUS
Employees11,791
SectorConsumer Cyclical
Sector Strength53
IndustryConsumer Products - Household & Personal
Share Statistics
EPS (TTM)0.00
Shares Outstanding871,993,300
10 Day Avg. Volume9,603,517
30 Day Avg. Volume8,172,016
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.79
Price to Cash Flow (P/CF)2.60
P/FCF Ratio2.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$8.48Price Target Upside48.77% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering17
Coty Business Overview & Revenue Model
Company DescriptionCoty Inc. is a leading global beauty company with a diverse portfolio that encompasses cosmetics, skincare, fragrances, and hair color. Established in 1904, Coty operates in over 150 countries and its brands are recognized worldwide. The company is structured into two primary segments: Consumer Beauty and Luxury. Its Consumer Beauty segment offers mass-market products in cosmetics, hair color, and styling, while the Luxury segment focuses on prestige fragrances and skincare. Coty's extensive brand portfolio includes well-known names such as CoverGirl, Max Factor, Rimmel, Sally Hansen, Calvin Klein, Hugo Boss, and Gucci.
How the Company Makes MoneyCoty Inc. generates revenue primarily through the sale of its beauty products across its two main segments: Consumer Beauty and Luxury. The Consumer Beauty segment, which accounts for a significant portion of the company's sales, targets the mass market with products available in drugstores, supermarkets, and online platforms. This segment's revenue comes from the sale of cosmetics, hair color, and styling products. The Luxury segment derives its revenue from premium-priced fragrances and skincare products, often sold in department stores, specialty retailers, and high-end digital platforms. Coty also benefits from strategic partnerships and licensing agreements with top fashion houses and celebrities, which help in enhancing brand visibility and expanding market reach. Additionally, Coty invests in marketing and innovation to maintain and grow its customer base in a highly competitive beauty industry.
Coty Financial Statement Overview
Summary
Coty's financial statements depict strong sales growth and efficient operations, evidenced by a high gross profit margin and stable EBIT and EBITDA margins. However, challenges persist in profitability, with low net profit margin and ROE. The balance sheet is stable with low leverage, and strong cash flow metrics highlight solid cash generation capabilities.Income Statement
Coty's income statement shows a strong gross profit margin of 64.6% for TTM (Trailing-Twelve-Months), indicating efficient production cost management. The net profit margin is a modest 0.2%, reflecting challenges in translating revenues into profits. The revenue growth rate from 2023 to 2024 is 9.7%, suggesting positive sales momentum. EBIT and EBITDA margins are stable at 10.2% and 13.1%, respectively, demonstrating consistent operational efficiency.78
Positive
Balance Sheet
The balance sheet reveals a debt-to-equity ratio of 0.07 for TTM, indicating low leverage and reduced financial risk. The return on equity (ROE) stands at 0.3%, showing limited profitability for shareholders. Equity ratio is healthy at 32.3%, signifying a solid capital structure with adequate equity financing. Overall, the balance sheet is stable but with room for improvement in profitability.72
Positive
Cash Flow
Coty's cash flow statement is strong, with a free cash flow growth rate of 15.2% from 2023 to 2024, indicating robust cash generation. Operating cash flow to net income ratio is high at 52.8, suggesting strong cash conversion from earnings. Free cash flow to net income ratio is 28.8, reflecting effective cash management. The company's cash flow performance underscores its financial health and liquidity.85
Very Positive
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 6.09B | 6.12B | 5.55B | 5.30B | 4.63B | 4.72B | Gross Profit |
| 3.93B | 3.94B | 3.55B | 3.37B | 2.77B | 2.73B | EBIT |
| 620.20M | 546.70M | 543.70M | 690.40M | 197.70M | -614.90M | EBITDA |
| 748.70M | 849.10M | 964.70M | 856.30M | 603.60M | -531.70M | Net Income Common Stockholders |
| 10.20M | 89.40M | 508.20M | 259.50M | -67.80M | -1.09B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 249.60M | 300.80M | 246.90M | 233.30M | 253.50M | 308.30M | Total Assets |
| 11.72B | 12.08B | 12.66B | 12.12B | 13.69B | 16.73B | Total Debt |
| 273.90M | 4.26B | 4.48B | 4.71B | 5.69B | 8.40B | Net Debt |
| 24.30M | 3.96B | 4.24B | 4.48B | 5.44B | 8.09B | Total Liabilities |
| 7.51B | 7.83B | 8.43B | 8.56B | 9.51B | 12.71B | Stockholders Equity |
| 3.78B | 3.83B | 3.95B | 3.30B | 3.90B | 3.72B |
| Cash Flow | Free Cash Flow | ||||
| 293.50M | 369.40M | 402.90M | 552.50M | 144.80M | -318.30M | Operating Cash Flow |
| 538.40M | 614.60M | 625.70M | 726.60M | 318.70M | -50.90M | Investing Cash Flow |
| -215.00M | -226.20M | -118.20M | 269.70M | 2.44B | -833.40M | Financing Cash Flow |
| -512.10M | -336.70M | -469.30M | -1.03B | -2.80B | 877.30M |
Coty Technical Analysis
Negative
5.70
Price Trends
6.62
Negative
7.12
Negative
8.41
Negative
Market Momentum
-0.34
Negative
38.17
Neutral
26.45
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For COTY, the sentiment is Negative. The current price of 5.7 is below the 20-day moving average (MA) of 5.93, below the 50-day MA of 6.62, and below the 200-day MA of 8.41, indicating a bearish trend. The MACD of -0.34 indicates Negative momentum. The RSI at 38.17 is Neutral, neither overbought nor oversold. The STOCH value of 26.45 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for COTY.
Coty Risk Analysis
Coty disclosed 44 risk factors in its most recent earnings report. Coty reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Coty Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $406.08B | 27.59 | 31.05% | 2.32% | 0.49% | 5.02% | |
73 Outperform | $1.22B | 11.10 | 7.19% | ― | -4.36% | -26.64% | |
73 Outperform | $150.02B | 23.28 | 30.53% | 3.20% | 1.99% | -10.59% | |
63 Neutral | $380.88M | ― | -22.50% | 3.13% | -12.04% | -1796.38% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% | |
57 Neutral | $4.81B | 40.12 | 0.33% | ― | 1.35% | -99.94% | |
50 Neutral | $24.49B | 147.29 | -14.17% | 2.97% | 0.07% | -249.21% |
* Consumer Cyclical Sector Average
Performance Comparison
COTY
Coty
5.70
-7.05
-55.29%
EL
The Estée Lauder Companies
71.91
-70.29
-49.43%
HELE
Helen Of Troy
55.09
-66.23
-54.59%
NUS
Nu Skin
8.16
-4.32
-34.62%
PG
Procter & Gamble
174.61
18.88
12.12%
UL
Unilever
58.35
10.88
22.92%
Coty Earnings Call Summary
Earnings Call Date: Feb 10, 2025 | % Change Since: -15.81% | Next Earnings Date: May 12, 2025
Earnings Call Sentiment Neutral
Coty's earnings call reveals a mixed picture with strong performance in gross margin expansion, leverage reduction, and online sales growth. However, significant challenges persist in China, Asia Travel Retail, and the U.S. Consumer Beauty segment. The cautious inventory management by retailers also presents ongoing difficulties. Despite these challenges, Coty remains optimistic about its brand health and future growth, particularly in the fragrance sector.Highlights
Strong Gross Margin Expansion
Coty reported a gross margin expansion in H1 close to 200 basis points, reaching approximately 67% by the end of Q2.
Record Low Leverage Ratio
The company achieved a leverage ratio below 3x for the first time in over 8 years, highlighting significant financial discipline.
Growth in Online Sales
Online sales have reached the $1 billion threshold, with both Consumer Beauty and Prestige divisions showing stellar growth, particularly on platforms like Amazon.
Successful Prestige Fragrance Launches
Key launches such as Gucci Flora Orchid and new Boss fragrances contributed to continued strong performance in the Prestige Fragrance sector.
Strong Sell-Out Indicators
Despite inventory challenges, the company reports strong sell-out figures, especially in the fragrance category, indicating brand health.
Lowlights
Challenges in China and Asia Travel Retail
Areas such as China, Travel Retail Asia, and Australia are impacting the Prestige business, contributing to a 3-point decrease in sell-in.
U.S. Consumer Beauty Challenges
Structural and competitive challenges in U.S. color cosmetics, coupled with the closure of pharma drug stores, impacted sales negatively by 3 points.
Retailer Inventory Replenishment Issues
Retailers are managing inventories cautiously, impacting the sell-in figures, particularly in Prestige fragrances, with replenishment not expected in H2.
Weak Performance in Color Cosmetics
The Color Cosmetics category faces challenges due to a lack of real innovation and increased competition from new brands.
Impact of Currency Fluctuations
Higher FX impacts for fiscal '25 are affecting pricing strategies, with expectations adjusted to low single-digit increases.
Company Guidance
During Coty's Second Quarter Fiscal 2025 earnings call, the company outlined several key metrics affecting its current and future performance. Laurent Mercier, the CFO, highlighted challenges impacting approximately 20% of the business, with notable disruptions in China, Travel Retail Asia, Australia, and Consumer Beauty, collectively impacting the Prestige business and U.S. Consumer Beauty by roughly 3 points each. Despite strong sellout performance, particularly in Fragrances with mid- to high single-digit growth, retailers are cautious with inventory management, leading to a gap between sell-in and sellout. The company remains prudent in its guidance, expecting no significant replenishment in H2. Coty continues to focus on expanding gross margins, which improved by close to 200 basis points in H1, and projects a full-year gross margin expansion of about 100 basis points. The company aims for an EBITDA margin increase of 70 to 90 basis points, targeting close to 19% by the end of the fiscal year. Coty is also preparing for significant product launches in fiscal '26 to drive organic sales growth and aims to maintain its medium-term outlook of 6% to 8% sales growth through strategic initiatives and market expansion.Coty Corporate Events
Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
Coty Reports Strong Margins Despite Revenue Challenges
Neutral
Feb 10, 2025
On February 7, 2025, Maria Asuncion Aramburuzabala Larregui resigned from Coty’s Board of Directors for personal reasons after four years of service, without any disagreements with the company. Coty reported its financial results for the first half and second quarter of fiscal year 2025, showing strong gross and operating margin expansion despite a decrease in net revenue due to FX impacts and divestitures. The prestige fragrance category outperformed, although broader challenges in the APAC region and pressured mass beauty markets impacted overall sales performance. The company achieved its lowest leverage in over eight years and continues to focus on strategic growth pillars.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.