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1. Company Snapshot

1.a. Company Description

Coty 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.

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1.b. Last Insights on COTY

Coty Inc.'s recent performance was negatively impacted by a $126.9 million quarterly loss and non-GAAP earnings per share of $0.14, which fell short of the $0.18 consensus estimate. Investigations into potential securities law violations by Levi & Korsinsky and Pomerantz Law Firm have added to investor concerns. The company's weak near-term outlook and suspension of FY'26 guidance have raised red flags. Coty's margin compression and execution risks have also contributed to the negative sentiment. Citigroup's neutral rating and lowered price target from $3.50 to $3.00 have further pressured the stock.

1.c. Company Highlights

2. Coty's Q2 FY2026 Earnings: A Step Towards Recovery

Coty reported revenues of $1.12 billion in Q2 FY2026, a decline of 4% year-over-year. The gross margin contraction was driven by high promotionality, tariffs, and Forex headwinds, resulting in a GAAP EPS of $0.14, below the estimated $0.18. The company's Consumer Beauty segment was the main drag, with a mid-single-digit decline in sales. However, the Prestige Beauty segment saw a sequential recovery from Q1 to Q2, driven by a synchronized sell-in and sell-out.

Publication Date: Feb -10

📋 Highlights
  • Color the Future Plan Progress:: Portfolio streamlining reduced declines from high single digits to low/mid-single digits, targeting sell-out and market share recovery.
  • Innovation & Fiscal 2027 Outlook:: Detailed innovation plans to drive growth in fiscal 2027, with platforming and SG&A optimizations offsetting near-term costs.
  • E-commerce Growth:: Prestige portfolio sales on Amazon rose 30% in 6 months, reflecting strong online channel investment.
  • Gross Margin Challenges:: Q2 margin contraction due to promotions, tariffs, and Forex; Q3 expects similar headwinds but Q4 recovery anticipated.
  • Q3 Sales Guidance:: Mid-single-digit Consumer Beauty decline expected, with sequential Q3 deterioration but easier Prestige comps post-Q1 recovery.

Operational Highlights

Markus Strobel, Executive Chairman and Interim CEO, discussed the Color the Future performance improvement plan, which includes streamlining the portfolio, focusing on iconic assets, and reducing SKU proliferation. The company has seen declines in these franchises decrease from high single digits to low single digits to mid-single digits, with the goal of achieving sell-out growth and market share growth. As Strobel mentioned, "the goal is to get back to sell-out growth and market share growth."

Outlook and Strategy

The company expects the promotional environment to continue into Q3, but is confident that its strategy will help manage and mitigate these headwinds. Coty is focusing on driving big brand franchises, building new brands, and tweaking its cost structure to maintain profitability. The company is also investing heavily in online and e-commerce, with its Prestige portfolio growing sales by 30% on Amazon in the last 6 months.

Valuation

Coty's current P/S Ratio of 0.39 and EV/EBITDA of 10.3 indicate a relatively reasonable valuation. However, the company's ROE of -14.58% and ROIC of 0.71% suggest that it still has significant operational challenges to overcome. Analysts estimate next year's revenue growth at 2.4%, which may not be sufficient to drive significant stock price appreciation. With an actual EPS of $0.14, below estimates, the stock may face downward pressure in the short term.

Key Takeaways

Coty's Q2 FY2026 earnings report highlights the company's ongoing efforts to refocus on its core business and drive growth through innovation and cost optimization. While the company still faces significant challenges, its strategy appears to be aimed at achieving long-term success. Investors will be watching closely to see if Coty can execute on its plans and drive growth in the coming quarters.

3. NewsRoom

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Coty Inc. (COTY) Shareholders Who Lost Money Have Opportunity to Lead Securities Fraud Lawsuit

18:07

Source: prnewswire.com

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COTY Investors Have Opportunity to Lead Coty Inc. Securities Fraud Lawsuit

17:49

Source: prnewswire.com

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ROSEN, TRUSTED INVESTOR COUNSEL, Encourages Coty Inc. Investors to Secure Counsel Before Important Deadline in Securities Class Action – COTY

15:55

Source: globenewswire.com

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COTY Investors Have Opportunity to Lead Coty Inc. Securities Fraud Lawsuit with the Schall Law Firm

15:08

Source: globenewswire.com

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Coty Inc. (COTY) Faces Securities Class Action Amid Surprise YoY Deterioration in Operating Income, CEO Departure, Withdrawn Guidance -- Hagens Berman

Apr -02

Source: globenewswire.com

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ROSEN, A LEADING AND LONGSTANDING FIRM, Encourages Coty Inc. Investors to Secure Counsel Before Important Deadline in Securities Class Action - COTY

Apr -02

Source: newsfilecorp.com

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Deadline Alert: Atara Biotherapeutics, Inc. (ATRA) Shareholders Who Lost Money Urged To Contact Glancy Prongay Wolke & Rotter LLP About Securities Fraud Lawsuit

Apr -02

Source: businesswire.com

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DEADLINE ALERT for LU, ATRA, and COTY: The Law Offices of Frank R. Cruz Reminds Investors of Class Actions on Behalf of Shareholders

Apr -02

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.99%)

6. Segments

Prestige

Expected Growth: 8.37%

Prestige segment's 8.37% growth is driven by Coty's strategic focus on luxury beauty, successful brand relaunches, and expansion in high-growth markets. Strong demand for premium fragrances, skincare, and makeup, particularly among younger consumers, also contributes to growth. Additionally, Coty's investments in e-commerce and digital marketing have enhanced brand visibility and accessibility, further fueling segment growth.

Consumer Beauty

Expected Growth: 4.77%

Coty Inc.'s Consumer Beauty segment growth of 4.77% is driven by increasing demand for skincare and haircare products, particularly among younger generations. Strong brand portfolios, such as Rimmel and Sally Hansen, contribute to growth. Additionally, strategic acquisitions, like Kylie Cosmetics, expand Coty's presence in the market. Effective marketing campaigns and e-commerce investments also support sales growth.

7. Detailed Products

Fragrances

Coty's fragrance portfolio includes a wide range of luxury, prestige, and mass fragrances for men and women.

Color Cosmetics

Coty's color cosmetics portfolio includes a variety of makeup products, including foundation, eyeshadow, mascara, lipstick, and nail polish.

Skin Care

Coty's skin care portfolio includes a range of products focused on anti-aging, hydration, and brightening, including moisturizers, serums, and cleansers.

Hair Care

Coty's hair care portfolio includes a range of products for hair coloring, styling, and care, including shampoos, conditioners, and hair dyes.

Body Care

Coty's body care portfolio includes a range of products for body wash, body lotion, and hand care.

8. Coty Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Coty Inc. operates in a competitive industry with many substitutes available, but the company's strong brand portfolio and wide distribution network mitigate the threat of substitutes.

Bargaining Power Of Customers

Coty Inc.'s customers are largely retailers and distributors, who have limited bargaining power due to the company's strong brand portfolio and wide distribution network.

Bargaining Power Of Suppliers

Coty Inc. relies on a diverse supplier base, which reduces the bargaining power of individual suppliers. However, the company's dependence on a few key suppliers for certain raw materials increases the bargaining power of those suppliers.

Threat Of New Entrants

The beauty industry has high barriers to entry, including significant capital requirements, regulatory hurdles, and the need for a strong brand portfolio. These barriers limit the threat of new entrants.

Intensity Of Rivalry

The beauty industry is highly competitive, with many established players competing for market share. Coty Inc. faces intense rivalry from other multinational companies, which increases the competitive pressure.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 53.14%
Debt Cost 7.75%
Equity Weight 46.86%
Equity Cost 13.12%
WACC 10.26%
Leverage 113.41%

11. Quality Control: Coty Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Inter Parfums

A-Score: 6.0/10

Value: 5.5

Growth: 8.0

Quality: 8.1

Yield: 6.0

Momentum: 1.5

Volatility: 7.0

1-Year Total Return ->

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Stock-Card
Clorox

A-Score: 5.7/10

Value: 6.2

Growth: 3.9

Quality: 7.1

Yield: 7.0

Momentum: 0.5

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
Newell Brands

A-Score: 4.0/10

Value: 8.8

Growth: 1.4

Quality: 2.3

Yield: 9.0

Momentum: 0.0

Volatility: 2.3

1-Year Total Return ->

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Stock-Card
e.l.f. Beauty

A-Score: 3.5/10

Value: 1.6

Growth: 9.6

Quality: 5.7

Yield: 0.0

Momentum: 2.0

Volatility: 2.0

1-Year Total Return ->

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Stock-Card
Coty

A-Score: 2.9/10

Value: 7.3

Growth: 3.1

Quality: 2.8

Yield: 0.0

Momentum: 0.0

Volatility: 4.3

1-Year Total Return ->

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Stock-Card
Helen of Troy

A-Score: 2.6/10

Value: 7.7

Growth: 3.2

Quality: 2.1

Yield: 0.0

Momentum: 0.0

Volatility: 2.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

2.05$

Current Price

2.05$

Potential

-0.00%

Expected Cash-Flows