One-glance verdict
Undervalued
$6.60 our estimate vs market $3.29
Wall Street consensus: $2.70 (-59.1% lower than our fair-value estimate)
50% below our estimate, below the bear case
Fundamentals snapshot
Coty Inc.
COTY · NYQ · Consumer Defensive · Household & Personal Products
Current price
$3.29
52-week range
$1.82 - $4.16
Market cap
$2.90B
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 Inc. makes and sells beauty products like perfumes and makeup under fancy brand names like Gucci and Kylie Jenner, as well as more everyday brands like CoverGirl. Most of its money comes from selling these products, and Coty's success depends on whether people keep buying them, which is shown by its sales margins (the percentage of money left after paying for the products and selling them).
How the company got here
Coty Inc. was founded in Paris in 1904 by François Coty, who revolutionized the perfume industry with innovative scents and packaging. [2, 5, 6] The company was officially established in New York in 1922 and went public in 1925. [2, 5] Over the decades, Coty grew through acquisitions, including a significant expansion in 2016 when it acquired 41 beauty brands from Procter & Gamble, making it a global leader in fragrance. [2, 7] More recently, Coty has been streamlining its business, selling off parts like its Wella professional hair business in 2020 to focus on its core strengths in beauty. [1, 7] The company's strategy has shifted towards strengthening its prestige brands, improving its consumer beauty offerings, and managing its debt.
What it actually does
Coty Inc. is a global beauty company that creates, manufactures, and sells a wide range of beauty products. [2, 18] These products include fragrances, color cosmetics (makeup), skincare, and body care items. [2, 8, 18] Coty operates in over 120 countries and territories, selling its products through various channels such as department stores, mass retailers, pharmacies, and online platforms. [6, 10] The company manages a portfolio of around 40 brands, which include both owned brands and licensed brands from fashion houses and celebrities. [2, 11]
Prestige
The Prestige segment is a key part of Coty's business, focusing on high-end beauty products. [1, 3] This includes fine fragrances, luxury cosmetics, and premium skincare. [1] These products are sold through exclusive retailers like department stores, perfumeries, and high-end e-commerce sites. [1] Brands in this segment often carry the names of well-known fashion designers or luxury houses, such as Burberry, Calvin Klein, Gucci, and Marc Jacobs, as well as celebrity-endorsed lines like Kylie Cosmetics. [1, 2] This division is a significant contributor to Coty's revenue and profitability. [3]
Consumer Beauty
The Consumer Beauty segment encompasses a broader range of more accessible beauty products. [1, 3] This includes mass-market color cosmetics (makeup), nail care, body care items, and everyday fragrances. [1] Brands found here are typically available in supermarkets, drug stores, and mass-market retailers. [1] Examples include CoverGirl, Rimmel, Max Factor, Adidas, and Sally Hansen. [1, 2] While this segment is larger in scale, it has faced more challenges due to intense competition and market softness compared to the Prestige division. [1, 7]
What management is betting on now
Coty's current strategy, often referred to as "Coty. Curated.," focuses on strengthening its leadership in prestige fragrances and improving the performance of its consumer beauty business. [1, 9, 13] Management is prioritizing growth in its high-margin Prestige division, while also working to stabilize and enhance the profitability of its Consumer Beauty segment. [1, 7] Key initiatives include expanding its skincare offerings, accelerating e-commerce capabilities, and driving operational efficiencies to improve profit margins. [1] The company is also focused on managing its debt and strengthening its overall financial health. [1]
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 $6.60 vs current price $3.29
Wall Street consensus is the average analyst price target: $2.70 (-59.1% lower than our fair-value estimate).
Our most-likely fair value is $6.60 a share — about 100.5% above today's price of $3.29, 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. which is weaker than most peers shown here.
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 $9.20B Interest coverage 5.02x +228% vs COTY Carries about 3.3x more debt cushion than COTY.
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 $288.10M Interest coverage 6.52x +325% vs COTY Carries about 4.3x 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
13.43x
P/B
0.97x
P/S
0.50x
EV/EBITDA
8.30x
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
0.0%
Payout ratio
0.0%
Last ex-div date
2020-02-14