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Coty (COTY)
NYSE:COTY

Coty (COTY) AI Stock Analysis

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Coty

(NYSE:COTY)

Rating:59Neutral
Price Target:
$5.00
▼(-1.38%Downside)
Coty's overall stock score reflects a combination of strengths in strategic initiatives and challenges in financial performance and market conditions. The company's robust gross margins and strategic focus on growth in fragrances are positive, but profitability issues, negative valuation metrics, and market pressures present significant risks.
Positive Factors
Consumer Beauty Revitalization
Management is taking steps to revive the Consumer Beauty segment, which is a significant part of the company's sales.
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.
Valuation
Despite the challenges, valuation is looking more compelling.
Negative Factors
Execution Risks
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.
Prestige Fragrance Pressure
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 Decline
Sales for the March-end quarter were down -6.2% YOY on a reported basis, with results underperforming expectations and the Prestige business worsening.

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

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 beauty products across its Consumer Beauty and Prestige segments. In the Consumer Beauty segment, the company earns money by selling mass-market products through various retail channels, including drugstores, supermarkets, and e-commerce platforms. The Prestige segment focuses on high-end, luxury beauty products sold in department stores, specialty retailers, and online. Coty's revenue streams are bolstered by strategic partnerships and licensing agreements with fashion and celebrity brands, which allow it to expand its product offerings and enhance brand recognition. Additionally, Coty invests in marketing and innovation to maintain competitive positioning and drive sales growth.

Coty Key Performance Indicators (KPIs)

Any
Any
Adjusted Operating Margin by Segment
Adjusted Operating Margin by Segment
Measures profitability as a percentage of revenue for each business segment, indicating how well Coty is managing costs relative to sales in different areas.
Chart InsightsCoty's Prestige segment shows a volatile yet upward trend in operating margins, peaking in late 2024, despite disruptions in China and Asia. The Consumer Beauty segment struggles with consistent negative quarters, reflecting challenges in U.S. markets and cautious retailer inventory strategies. The earnings call highlights strong gross margin expansion and online sales growth, but ongoing issues in Consumer Beauty and cautious inventory management could hinder recovery. Coty remains optimistic about future growth, driven by strategic product launches and market expansion, aiming for improved EBITDA margins and sustained sales growth.
Data provided by:Main Street Data

Coty Earnings Call Summary

Earnings Call Date:May 06, 2025
(Q3-2025)
|
% Change Since: -1.93%|
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 Financial Statement Overview

Summary
Coty's financial performance is mixed, with strong gross margins but a significant decline in net income impacting profitability. The balance sheet shows improved leverage and a stable equity position, while cash flow generation remains positive despite the net loss. However, challenges in revenue growth and profitability require strategic focus.
Income Statement
65
Positive
Coty experienced fluctuating revenue growth, with a decline in TTM revenue compared to the previous year. The gross profit margin remained strong at 64.43% TTM, but the net profit margin turned negative at -6.59% due to a substantial net loss. The EBIT and EBITDA margins also decreased, indicating challenges in maintaining operational efficiency.
Balance Sheet
70
Positive
The debt-to-equity ratio improved slightly, reflecting better leverage management, with a ratio of 1.12 TTM. However, the return on equity declined to -10.89% due to negative net income. The equity ratio is healthy at 31.72%, indicating a substantial equity buffer against liabilities.
Cash Flow
68
Positive
The company's free cash flow decreased slightly TTM, with a free cash flow to net income ratio being negative due to the net loss. The operating cash flow to net income ratio was positive at 1.48 TTM, showing cash-generating operations despite the net loss.
Breakdown
TTMJun 2024Jun 2023Jun 2022Jun 2021Jun 2020
Income StatementTotal Revenue
6.00B6.12B5.55B5.30B4.63B4.72B
Gross Profit
3.87B3.94B3.55B3.37B2.77B2.73B
EBIT
262.00M546.70M543.70M690.40M197.70M-614.90M
EBITDA
288.30M849.10M964.70M856.30M603.60M-531.70M
Net Income Common Stockholders
-396.00M89.40M508.20M259.50M-67.80M-1.09B
Balance SheetCash, Cash Equivalents and Short-Term Investments
243.50M300.80M246.90M233.30M253.50M308.30M
Total Assets
11.47B12.08B12.66B12.12B13.69B16.73B
Total Debt
4.09B4.26B4.48B4.71B5.69B8.40B
Net Debt
3.85B3.96B4.24B4.48B5.44B8.09B
Total Liabilities
7.55B7.83B8.43B8.56B9.51B12.71B
Stockholders Equity
3.64B3.83B3.95B3.30B3.90B3.72B
Cash FlowFree Cash Flow
362.40M369.40M402.90M552.50M144.80M-318.30M
Operating Cash Flow
585.90M614.60M625.70M726.60M318.70M-50.90M
Investing Cash Flow
-144.80M-226.20M-118.20M269.70M2.44B-833.40M
Financing Cash Flow
-456.70M-336.70M-469.30M-1.03B-2.80B877.30M

Coty Technical Analysis

Technical Analysis Sentiment
Positive
Last Price5.07
Price Trends
50DMA
4.99
Positive
100DMA
5.57
Negative
200DMA
6.79
Negative
Market Momentum
MACD
<0.01
Negative
RSI
53.11
Neutral
STOCH
72.81
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For COTY, the sentiment is Positive. The current price of 5.07 is above the 20-day moving average (MA) of 4.96, above the 50-day MA of 4.99, and below the 200-day MA of 6.79, indicating a neutral trend. The MACD of <0.01 indicates Negative momentum. The RSI at 53.11 is Neutral, neither overbought nor oversold. The STOCH value of 72.81 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
82
Outperform
$4.48B27.1222.16%2.29%10.32%18.55%
ELELF
75
Outperform
$6.64B61.4215.97%28.28%-14.79%
EPEPC
69
Neutral
$1.23B15.275.53%2.29%-2.11%-28.79%
64
Neutral
$678.87M5.277.45%-4.93%-23.61%
63
Neutral
$6.98B11.412.80%4.24%2.68%-24.94%
59
Neutral
$4.48B40.12-10.58%-1.68%-302.11%
ELEL
59
Neutral
$25.35B147.29-17.27%1.99%-3.70%-235.59%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
COTY
Coty
5.07
-4.89
-49.10%
EL
The Estée Lauder Companies
69.86
-41.75
-37.41%
HELE
Helen Of Troy
28.44
-71.59
-71.57%
IPAR
Inter Parfums
140.79
30.04
27.12%
EPC
Edgewell Personal Care
25.35
-12.57
-33.15%
ELF
e.l.f. Beauty
124.52
-75.92
-37.88%

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
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.