Coty (COTY) AI Stock Analysis

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Coty

(NYSE:COTY)

62Neutral

Coty's stock is supported by strong cash flow and sales growth but faces challenges with profitability and technical momentum. The mixed earnings call outlook, with strategic growth plans offset by short-term market pressures, results in a middling stock score. Valuation concerns further weigh on the overall assessment.

Positive Factors

Cost Management

Coty is taking a proactive approach to reduce costs and mitigate tariff exposure related to premium fragrances imports from Europe into the U.S.

Innovation and Brand Building

Focus on mass fragrance and the longevity of prestige fragrance is aligned with Coty's strengths in innovation and brand building.

Valuation

Despite the challenges, valuation is looking more compelling.

Negative Factors

Execution Risk

There is a modest degree of execution risk in Coty's turnaround plan due to the number of goals the company is trying to accomplish.

Product Performance

Prestige fragrance is now underperforming the industry as well as the rest of the prestige business in a category that is generally resilient and continues to see growth.

Sales Trends

Sales trends continue to worsen driven by the need to clean up retail inventory, a normalizing beauty market, and tough compares.

Coty (COTY) vs. S&P 500 (SPY)

Market Cap

$4.51B

Dividend YieldN/A

Average Volume (3M)7.50M

Price to Earnings (P/E)40.1

Beta (1Y)0.85

Revenue Growth-1.68%

EPS Growth-302.11%

CountryUS

Employees11,791

SectorConsumer Cyclical

Sector Strength58

IndustryHousehold & Personal Products

Share Statistics

EPS (TTM)0.01

Shares Outstanding871,993,300

10 Day Avg. Volume6,273,498

30 Day Avg. Volume7,495,283

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap2.20

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit2.52

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$6.36

Price Target Upside31.95% Upside

Rating ConsensusHold

Number of Analyst Covering18

Coty Business Overview & Revenue Model

Company DescriptionCoty Inc., together with its subsidiaries, engages in the manufacture, marketing, distribution, and sale of beauty products worldwide. The company provides prestige fragrances, skin care, and color cosmetics products through prestige retailers, including perfumeries, department stores, e-retailers, direct-to-consumer websites, and duty-free shops under the Alexander McQueen, Burberry, Bottega Veneta, Calvin Klein, Cavalli, Chloe, Davidoff, Escada, Gucci, Hugo Boss, Jil Sander, Joop!, Kylie Jenner, Lacoste, Lancaster, Marc Jacobs, Miu Miu, Nikos, philosophy, Kim Kardashian West, and Tiffany & Co. brands. It also offers mass color cosmetics, fragrance, skin care, and body care products primarily through hypermarkets, supermarkets, drug stores, pharmacies, mid-tier department stores, traditional food and drug retailers, and e-commerce retailers under the Adidas, Beckham, Biocolor, Bozzano, Bourjois, Bruno Banani, CoverGirl, Jovan, Max Factor, Mexx, Monange, Nautica, Paixao, Rimmel, Risque, Sally Hansen, Stetson, and 007 James Bond brands. Coty Inc. also sells its products through third-party distributors to approximately 150 countries and territories. The company was founded in 1904 and is based in New York, New York. Coty Inc. is a subsidiary of Cottage Holdco B.V.

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 Key Performance Indicators (KPIs)

Any

Adjusted Operating Margin by Segment

Adjusted Operating Margin by Segment
Measures the profitability of each segment as a percentage of revenue, offering a clear view of which segments are most efficiently converting sales into profit.

Chart InsightsCoty's Prestige segment shows a volatile but upward trend in operating margins, peaking in late 2024, despite disruptions in China and Asia impacting sell-in. The Consumer Beauty segment struggles with consistent growth, hindered by structural challenges in the U.S. and cautious retailer inventory management. However, Coty's focus on gross margin expansion and strategic product launches in fiscal '26 aims to bolster future growth. The company's strong online sales and fragrance sector performance provide a buffer against current market challenges, supporting its medium-term sales growth outlook.

Data provided by:

Main Street Data

Coty Financial Statement Overview

Summary

Coty's financial performance reflects strong sales growth and efficient operations, as evidenced by a high gross profit margin and stable EBIT and EBITDA margins. The company demonstrates robust cash flow generation, although profitability remains a challenge with a low net profit margin and ROE. The balance sheet shows low leverage and a healthy equity structure, enhancing financial stability.

Income Statement

Positive

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.

Balance Sheet

Positive

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.

Cash Flow

Very Positive

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.

Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
6.12B	5.55B	5.30B	4.63B	4.72B
	Gross Profit
3.94B	3.55B	3.37B	2.77B	2.73B
	EBIT
546.70M	543.70M	690.40M	197.70M	-614.90M
	EBITDA
849.10M	964.70M	856.30M	603.60M	-531.70M
	Net Income Common Stockholders
89.40M	508.20M	259.50M	-67.80M	-1.09B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
300.80M	246.90M	233.30M	253.50M	308.30M
	Total Assets
12.08B	12.66B	12.12B	13.69B	16.73B
	Total Debt
4.26B	4.48B	4.71B	5.69B	8.40B
	Net Debt
3.96B	4.24B	4.48B	5.44B	8.09B
	Total Liabilities
7.83B	8.43B	8.56B	9.51B	12.71B
	Stockholders Equity
3.83B	3.95B	3.30B	3.90B	3.72B
Cash Flow		Free Cash Flow
369.40M	402.90M	552.50M	144.80M	-318.30M
	Operating Cash Flow
614.60M	625.70M	726.60M	318.70M	-50.90M
	Investing Cash Flow
-226.20M	-118.20M	269.70M	2.44B	-833.40M
	Financing Cash Flow
-336.70M	-469.30M	-1.03B	-2.80B	877.30M

Coty Technical Analysis

Technical Analysis Sentiment

Negative

Last Price4.82

Price Trends

50DMA

5.29

Negative

100DMA

6.04

Negative

200DMA

7.32

Negative

Market Momentum

MACD

-0.11

Negative

RSI

42.93

Neutral

STOCH

49.50

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 4.82 is below the 20-day moving average (MA) of 4.96, below the 50-day MA of 5.29, and below the 200-day MA of 7.32, indicating a bearish trend. The MACD of -0.11 indicates Negative momentum. The RSI at 42.93 is Neutral, neither overbought nor oversold. The STOCH value of 49.50 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 (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
IPAR	79 Outperform	$3.85B	21.45	22.16%	2.55%	10.32%	18.55%
ELF	67 Neutral	$3.82B	40.25	14.24%	―	46.27%	-26.45%
EPC	65 Neutral	$1.45B	16.76	5.53%	2.22%	-2.11%	-28.79%
HELE	63 Neutral	$582.97M	4.71	7.45%	―	-4.93%	-23.61%
COTY	62 Neutral	$4.51B	40.12	-10.58%	―	-1.68%	-302.11%
Sector *	61 Neutral	$6.59B	11.77	3.06%	3.98%	2.56%	-20.85%
EL	53 Neutral	$21.06B	147.29	-17.27%	3.41%	-3.70%	-235.59%

* Consumer Cyclical Sector Average

Performance Comparison

COTY

Coty

4.82

-6.36

-56.89%

The Estée Lauder Companies

61.24

-67.51

-52.43%

HELE

Helen Of Troy

26.74

-75.54

-73.86%

IPAR

Inter Parfums

119.82

2.22

1.89%

EPC

Edgewell Personal Care

27.20

-11.42

-29.57%

ELF

e.l.f. Beauty

67.90

-102.53

-60.16%

Coty Earnings Call Summary

Earnings Call Date:May 06, 2025

(Q3-2025)

% Change Since: -6.77%|

Next Earnings Date:Aug 21, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mix of positive developments, such as sustained growth in the fragrance sector and strategic organizational changes, alongside challenges, including expected sales declines and tariff impacts. The strategic initiatives and cost-saving plans are promising, but the immediate outlook is clouded by market pressures and U.S. market weakness.

Q3-2025 Updates

Positive Updates

Sustained Growth in Prestige Fragrances

The Prestige fragrance category continues to grow at a mid-single-digit rate, with strong performance in the U.S. and most European markets, driven by new consumer segments like Gen Zs and male teens.

Mass Fragrance Performance

Mass fragrances are experiencing high-single-digit to double-digit growth, highlighting a shift in focus within the Consumer Beauty division towards more profitable segments.

Strategic Organizational Changes

Coty has implemented organizational changes in the U.S. and other regions to enhance agility and align with changing market dynamics, particularly to better integrate local and global strategies.

Tariff Mitigation Strategies

Coty is proactively mitigating tariff impacts by leveraging its manufacturing footprint, initiating dual-sourcing strategies, and implementing mid-single-digit price increases on Prestige products.

Cost-Saving Initiatives

Coty announced $370 million in cost-saving initiatives over the next two years, aimed at creating headroom for brand investments and continuing EBITDA margin improvement.

Negative Updates

Q4 Sales Deceleration

Coty expects a sharp sales deceleration in Q4 due to efforts to clean up the baseline in the Prestige division and ongoing pressure in the Prestige cosmetics market, mainly from Asia and China.

Consumer Beauty Challenges

The Consumer Beauty division faces a mid-single-digit decline in Color Cosmetics sales globally, exacerbated by market declines and increased competition from indie brands.

U.S. Market Weakness

Significant sales decline in the U.S. market, driven by retailer inventory tightening and competitive pressures, particularly in Color Cosmetics.

Tariff Impact on Prestige Fragrance

Tariffs are expected to impact the Prestige fragrance segment, with an estimated low $100 million cost due to sourcing and component challenges.

Company Guidance

In the Coty Third Quarter Fiscal 2025 Conference Call, Sue Nabi, CEO, and Laurent Mercier, CFO, provided detailed guidance on the company's outlook. They highlighted a strategic focus on the Prestige division, aiming for a clean baseline in light of a significant innovation pipeline for fiscal 2026. Despite robust growth in the Fragrance category, Coty expects a sharp sales deceleration in Q4 due to strategic inventory adjustments and pressures in the Prestige cosmetics market, particularly in Asia and China. The Consumer Beauty division is experiencing a mid-single-digit decline, influenced by market conditions and marketing allocation impacts, but this is expected to reverse in the next fiscal year. Overall, Coty anticipates a mid-single-digit growth in the Prestige fragrance category, driven by sustained demand in the U.S., Europe, and the gradual recovery in China. Additionally, Coty is implementing mid-single-digit price increases for Prestige products to offset anticipated tariff impacts in fiscal 2026. This strategic move is part of a broader effort to protect margins while fostering growth across key markets.

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.