One-glance verdict
Undervalued
$4.44 our estimate vs market $2.43
Wall Street consensus: $2.69 (-39.5% lower than our fair-value estimate)
45% below our estimate, below the bear case
Fundamentals snapshot
Coty Inc.
COTY · NYQ · Consumer Defensive · Household & Personal Products
Current price
$2.43
52-week range
$1.82 - $4.47
Market cap
$2.14B
Balance sheet
Stretched
1.53x Concerning
Net debt $3.12B. Interest coverage shows how many times profit covers the interest bill.
What stands out
1 Reward
2 Risks
1 rewards · 2 risks
- Reward Free cash flow was positive in 8/10 years.
- Risk Return on equity was -16.1% last year — the company lost money on shareholders' equity.
- Risk Operating margin compressed from 9.7% to -2.4% over 3 years.
What this company does
Coty Inc.
Coty is a global beauty company that sells makeup, fragrances, and skin and nail care products. It makes most of its money from two areas: high-end "Prestige" brands like Gucci and Calvin Klein sold in department stores, and everyday "Consumer Beauty" brands like CoverGirl and Rimmel found in drugstores. This strategy of selling both luxury and affordable products allows Coty to reach a very wide range of customers with different budgets.
How the company got here
Founded in Paris in 1904 by François Coty, the company started by creating innovative fragrances. Over many decades, it grew by purchasing other companies, a strategy that dramatically expanded its reach. A major turning point was the 2016 purchase of over 40 beauty brands from Procter & Gamble, which included household names like CoverGirl and Max Factor. More recently, Coty acquired a majority stake in Kylie Cosmetics, founded by Kylie Jenner, to connect with younger, digitally-savvy customers. Under its current CEO, the company has been focused on growing its high-end brands, improving its mass-market products, and reducing its debt.
What it actually does
Coty is a global beauty company that makes and sells a wide variety of products. You can find their items in almost every type of store, from high-end department stores and duty-free shops in airports to local supermarkets and drugstores. The company's products fall into a few main categories: fragrances (perfumes and colognes), color cosmetics (makeup like lipstick and foundation), and skin and body care. Coty owns some of its brands, like CoverGirl and Sally Hansen, and licenses (leases the rights to use a brand name) others from famous fashion houses like Gucci, Calvin Klein, and Burberry.
Prestige
This is Coty's luxury division, focused on higher-priced products you would find in department stores and specialty beauty retailers. It is the company's largest and most profitable segment, making up about two-thirds of the company's sales. The main products here are high-end fragrances from iconic fashion brands like Burberry, Calvin Klein, Gucci, and Marc Jacobs. This segment also includes premium skincare and makeup from brands such as Lancaster, philosophy, and Kylie Cosmetics.
Consumer Beauty
This part of the business sells more affordable, everyday beauty products that you would typically find in drugstores, supermarkets, and mass retailers like Target and Walmart. This segment accounts for the remaining third of Coty's revenue. Key products include makeup from brands like CoverGirl, Rimmel, and Max Factor, as well as nail polish and treatments from Sally Hansen. It also includes body care products and fragrances from brands like Adidas and David Beckham.
What management is betting on now
The company's current strategy, called "Coty.Curated," is to focus on its most important brands and markets to improve performance. A major priority is to continue growing the successful Prestige division, especially its high-end fragrances which have been a strong engine for growth. Management is also working to stabilize and improve the Consumer Beauty business by simplifying its product offerings and focusing on its most popular items. Finally, a key financial goal is deleveraging (reducing company debt) to create a more stable financial foundation for the future.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2025 Q1
$-7.90M
FY2025 Q2
$419.00M
FY2025 Q3
$-168.40M
FY2025 Q4
$34.90M
FY2026 Q1
$11.20M
FY2026 Q2
$513.10M
FY2026 Q3
$-248.70M
FY2026 Q4
$72.60M
Revenue
$1.27B
Net income
$-141.00M
Diluted EPS
-0.16
Operating cash flow
$116.00M
Free cash flow
$72.60M
Fetching…
Sources
Revenue
$1.28B
Net income
$-408.10M
Diluted EPS
-0.47
Operating cash flow
$-203.10M
Free cash flow
$-248.70M
Fetching…
Sources
Revenue
$1.68B
Net income
$-123.60M
Diluted EPS
-0.14
Operating cash flow
$559.70M
Free cash flow
$513.10M
Fetching…
Sources
Revenue
$1.58B
Net income
$67.90M
Diluted EPS
0.07
Operating cash flow
$65.20M
Free cash flow
$11.20M
Fetching…
Sources
Revenue
$1.25B
Net income
$-68.80M
Diluted EPS
-0.08
Operating cash flow
$83.20M
Free cash flow
$34.90M
Fetching…
Sources
Revenue
$1.30B
Net income
$-405.70M
Diluted EPS
-0.47
Operating cash flow
$-122.50M
Free cash flow
$-168.40M
Fetching…
Sources
Revenue
$1.67B
Net income
$23.70M
Diluted EPS
0.02
Operating cash flow
$464.50M
Free cash flow
$419.00M
Fetching…
Sources
Revenue
$1.67B
Net income
$82.90M
Diluted EPS
0.09
Operating cash flow
$67.40M
Free cash flow
$-7.90M
Fetching…
Sources
Is it cheap or expensive?
Fair value $4.44 vs current price $2.43
Wall Street consensus is the average analyst price target: $2.69 (-39.5% lower than our fair-value estimate).
Our most-likely fair value is $4.44 a share — about 82.8% above today's price of $2.43, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Stretched
Net debt $3.1B. Interest coverage 1.5x.
Net debt
$3.12B
Interest coverage
1.53x
Coty Inc.'s profit covers its interest bill about 1.5 times over.
Stretched
Worse cushion
Baseline
Better cushion
COTY
BASELINE
Coty Inc.
Total debt $3.30B Interest coverage 1.53x This is the baseline the peer rows are being compared against.
Total debt $929.30M Interest coverage 3.22x +110% vs COTY Carries about 2.1x more debt cushion than COTY.
Total debt $164.91M Interest coverage 37.30x +2,335% vs COTY Carries about 24.4x more debt cushion than COTY.
Total debt $1.28B Interest coverage 2.67x +74% vs COTY Carries about 1.7x more debt cushion than COTY.
Total debt $5.71B Interest coverage 1.47x -4% vs COTY Has roughly the same debt cushion as COTY.
Total debt $748.20M Interest coverage 4.98x +225% vs COTY Carries about 3.2x more debt cushion than COTY.
What you should know
The case for and against COTY
1 Reward
2 Risks
Rewards
-
Free cash flow was positive in 8/10 years.
Risks
-
Return on equity was -16.1% last year — the company lost money on shareholders' equity.
-
Operating margin compressed from 9.7% to -2.4% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
—
Forward P/E
9.50x
P/B
0.72x
P/S
0.37x
EV/EBITDA
7.13x
PEG ratio
0.18x
Profitability
How much profit each dollar creates
Gross margin
62.9%
Operating margin
-2.4%
Net margin
-10.4%
ROE
-16.1%
ROA
1.8%
Health
Liquidity and balance-sheet strength
Debt / equity
0.98x
Current ratio
0.76x
Quick ratio
0.28x
Total debt
$3.30B
Total cash
$176.10M
Growth
How the business has been compounding
Revenue TTM
$5.81B
Revenue 5Y CAGR
2.3%
EPS TTM
-0.70
EPS 5Y CAGR
—
Cash flow
How much cash the business throws off
Operating CF TTM
$537.80M
Free CF TTM
$348.20M
FCF margin
6.0%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
2020-02-14