Coty (COTY) AI Stock Analysis

Compare

1,705 Followers

COTY Dividends

Top Page

Coty

(NYSE:COTY)

62Neutral

Coty's overall stock score reflects a company with strong operational efficiency and cash flow, but facing profitability challenges and technical headwinds. Despite a positive outlook from strategic initiatives and product launches, immediate valuation concerns and market difficulties weigh on the stock. Improving profit margins and addressing market challenges are key to enhancing future performance.

Positive Factors

Cost Efficiency

Coty's 'All-in to Win' program is streamlining operations and cutting jobs, leading to significant cost savings and a stronger financial position.

Debt Management

COTY plans to use sale proceeds to pay down debt, which should be positively received by the market.

E-commerce Growth

COTY's brands in both Prestige & Consumer Beauty are outperforming in the e-commerce channel and taking market share.

Negative Factors

Consumer Spending

There are concerns about consumer spending weakness affecting Coty's sales, with mass cosmetics experiencing softening demand in the US.

Market Challenges

Coty faces topline weakness and challenges in maintaining growth due to a normalizing beauty market and global economic weakness.

Valuation Concerns

The downgrade to Underperform is based on a lower valuation for both the Prestige and Consumer Beauty businesses due to slowing growth.

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

Market Cap

$4.51B

Dividend YieldN/A

Average Volume (3M)7.55M

Price to Earnings (P/E)40.1

Beta (1Y)0.85

Revenue Growth1.35%

EPS Growth-99.94%

CountryUS

Employees11,791

SectorConsumer Cyclical

Sector Strength59

IndustryHousehold & Personal Products

Share Statistics

EPS (TTM)N/A

Shares Outstanding871,993,300

10 Day Avg. Volume6,139,763

30 Day Avg. Volume7,551,525

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

$7.15

Price Target Upside38.30% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering17

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

―

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

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

―

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

Neutral

Last Price5.17

Price Trends

50DMA

5.36

Negative

100DMA

6.15

Negative

200DMA

7.42

Negative

Market Momentum

MACD

-0.10

Negative

RSI

51.23

Neutral

STOCH

84.73

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For COTY, the sentiment is Neutral. The current price of 5.17 is above the 20-day moving average (MA) of 4.97, below the 50-day MA of 5.36, and below the 200-day MA of 7.42, indicating a neutral trend. The MACD of -0.10 indicates Negative momentum. The RSI at 51.23 is Neutral, neither overbought nor oversold. The STOCH value of 84.73 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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	78 Outperform	$3.63B	22.09	22.76%	2.70%	10.22%	7.55%
ELF	67 Neutral	$3.84B	40.47	14.24%	―	46.27%	-26.45%
EPC	67 Neutral	$1.47B	16.72	6.02%	1.96%	-1.24%	-10.95%
HELE	64 Neutral	$647.21M	5.23	7.45%	―	-4.93%	-23.61%
COTY	62 Neutral	$4.51B	40.12	0.33%	―	1.35%	-99.94%
Sector *	61 Neutral	$6.65B	11.64	3.00%	3.98%	2.61%	-21.41%
EL	53 Neutral	$19.87B	147.29	-17.27%	3.40%	-3.70%	-235.59%

* Consumer Cyclical Sector Average

Performance Comparison

COTY

Coty

5.17

-6.33

-55.04%

The Estée Lauder Companies

57.70

-69.51

-54.64%

HELE

Helen Of Troy

28.21

-70.49

-71.42%

IPAR

Inter Parfums

113.02

-3.80

-3.25%

EPC

Edgewell Personal Care

30.57

-6.33

-17.15%

ELF

e.l.f. Beauty

68.05

-96.64

-58.68%

Coty Earnings Call Summary

Earnings Call Date:May 06, 2025

(Q2-2025)

% Change Since: -23.63%|

Next Earnings Date:Aug 21, 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.

Q2-2025 Updates

Positive Updates

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.

Negative Updates

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.