We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Coty (COTY) Q4 Earnings: Will Buyouts Play a Strong Role?
Read MoreHide Full Article
Coty Inc. (COTY - Free Report) is scheduled to release fourth-quarter fiscal 2018 results on Aug 21. This cosmetics giant delivered a positive earnings surprise of 8.3% in the last reported quarter and outperformed the Zacks Consensus Estimate for three consecutive quarters now.
Let’s see if the company can retain its impressive past record this time around too.
Buyouts, E-Commerce Initiatives to Aid
Benefits from acquisitions are likely to continue driving Coty, which concluded the buyout of the iconic Burberry brand in the second quarter of fiscal 2018. Notably, this buyout fueled Coty’s Luxury segment performance in the third quarter itself. Other evidences in this regard include the acquisition of 60% stake in Younique (which forms part of the Consumer Beauty segment) and buyout of Good Hair Day or ghd (which is part of its Professional Beauty section). Prior to that, the company completed the buyout of Procter & Gamble’s (PG - Free Report) global fine fragrances, salon professional, cosmetics and retail hair color businesses along with select hair styling brands (the P&G Beauty Business). The company is on track with P&G Beauty’s integration. Coty’s top line is benefiting from the aforementioned buyouts, evident from the third-quarter fiscal 2018 results. Markedly, sales in the quarter were largely backed by contributions from Younique and Burberry. Moreover, the company’s acquisition of Hypermarcas S.A. has strengthened its position in Brazil.
Also, Coty is boosting its end-to-end digital transformation efforts including e-commerce across its divisions and regions. The company has been taking great strides in this regard, which helped it witness healthy e-commerce sales growth across all three segments in the third quarter. In the second quarter of fiscal 2018, Coty launched artificial intelligence tools on boots.com in the United Kingdom and also partnered with Amazon (AMZN - Free Report) in order to launch “Let’s Get Ready” for the Amazon Echo Show. Apart from this, the buyout of the leading online peer-to-peer social selling platform, Younique is a major evidence of Coty’s focus on connecting with customers through e-commerce initiatives. Further, the company is making progress with COVERGIRL brand through its Custom Blend app. The app helps customers to take a digital, social and influencer-led go-to-market approach, and personalize and customize it as per desire.
Clearly, buyouts and strength in e-commerce business are likely to serve as tailwinds for Coty’s performance henceforth. Incidentally, Estee Lauder (EL - Free Report) , a leading player in the cosmetics space, has also been riding on buyouts and a solid e-commerce business.
Will Consumer Beauty Unit Remain a Worry?
Coming back to Coty, the company has been struggling with its Consumer Beauty unit for a while now as this segment has been posting soft organic sales for the past few quarters. The segment remained pressurized in the third quarter of fiscal 2018, wherein organic sales dropped 4.4%, much wider than a 1.3% dip recorded in the previous quarter. Results this time were hurt by weak brands and pricing actions undertaken in Brazil. Also, persistent softness in the global mass beauty market and intense competition remain deterrents. Apart from this, the segment has been consistently witnessing underlying challenges in North America and Europe. Though management is working toward enhancing this segment, full recovery is likely to take time.
What to Expect?
Nonetheless, management remains pleased with solid growth at its Luxury business and ongoing momentum at the Professional Beauty segment. We expect these factors, the aforementioned growth drivers and a sturdy brand portfolio to help Coty counter the softness at its consumer beauty unit and continue with its solid performance. In third-quarter fiscal 2018, both top and bottom lines surpassed the respective Zacks Consensus Estimate and the former also improved year over year. Notably, this marked the company’s third and fifth straight quarter of earnings and sales beat, respectively. While earnings were backed by strong sales and improved gross margin fueled by solid cost control, sales gained from buyouts and brand strength. The company remains optimistic about the ongoing synergies from buyouts, which have been solidifying its portfolio. The company expects modest net revenue growth in the second half of fiscal 2018. Management also expects healthy margin improvement, with maximum contributions coming from the fourth quarter.
The Zacks Consensus Estimate for sales is pegged at $2,305 million, up 2.9% from the year-ago figure. Further, the consensus mark for earnings stands at 14 cents compared with breakeven results reported in the fourth quarter of fiscal 2017.
What Does the Zacks Model Unveil?
However, our proven model doesn’t show thatCotyis likely to beat bottom-line estimates this quarter. For this to happen, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
Image: Bigstock
Coty (COTY) Q4 Earnings: Will Buyouts Play a Strong Role?
Coty Inc. (COTY - Free Report) is scheduled to release fourth-quarter fiscal 2018 results on Aug 21. This cosmetics giant delivered a positive earnings surprise of 8.3% in the last reported quarter and outperformed the Zacks Consensus Estimate for three consecutive quarters now.
Coty Inc. Price and EPS Surprise
Coty Inc. Price and EPS Surprise | Coty Inc. Quote
Let’s see if the company can retain its impressive past record this time around too.
Buyouts, E-Commerce Initiatives to Aid
Benefits from acquisitions are likely to continue driving Coty, which concluded the buyout of the iconic Burberry brand in the second quarter of fiscal 2018. Notably, this buyout fueled Coty’s Luxury segment performance in the third quarter itself. Other evidences in this regard include the acquisition of 60% stake in Younique (which forms part of the Consumer Beauty segment) and buyout of Good Hair Day or ghd (which is part of its Professional Beauty section). Prior to that, the company completed the buyout of Procter & Gamble’s (PG - Free Report) global fine fragrances, salon professional, cosmetics and retail hair color businesses along with select hair styling brands (the P&G Beauty Business). The company is on track with P&G Beauty’s integration. Coty’s top line is benefiting from the aforementioned buyouts, evident from the third-quarter fiscal 2018 results. Markedly, sales in the quarter were largely backed by contributions from Younique and Burberry. Moreover, the company’s acquisition of Hypermarcas S.A. has strengthened its position in Brazil.
Also, Coty is boosting its end-to-end digital transformation efforts including e-commerce across its divisions and regions. The company has been taking great strides in this regard, which helped it witness healthy e-commerce sales growth across all three segments in the third quarter. In the second quarter of fiscal 2018, Coty launched artificial intelligence tools on boots.com in the United Kingdom and also partnered with Amazon (AMZN - Free Report) in order to launch “Let’s Get Ready” for the Amazon Echo Show. Apart from this, the buyout of the leading online peer-to-peer social selling platform, Younique is a major evidence of Coty’s focus on connecting with customers through e-commerce initiatives. Further, the company is making progress with COVERGIRL brand through its Custom Blend app. The app helps customers to take a digital, social and influencer-led go-to-market approach, and personalize and customize it as per desire.
Clearly, buyouts and strength in e-commerce business are likely to serve as tailwinds for Coty’s performance henceforth. Incidentally, Estee Lauder (EL - Free Report) , a leading player in the cosmetics space, has also been riding on buyouts and a solid e-commerce business.
Will Consumer Beauty Unit Remain a Worry?
Coming back to Coty, the company has been struggling with its Consumer Beauty unit for a while now as this segment has been posting soft organic sales for the past few quarters. The segment remained pressurized in the third quarter of fiscal 2018, wherein organic sales dropped 4.4%, much wider than a 1.3% dip recorded in the previous quarter. Results this time were hurt by weak brands and pricing actions undertaken in Brazil. Also, persistent softness in the global mass beauty market and intense competition remain deterrents. Apart from this, the segment has been consistently witnessing underlying challenges in North America and Europe. Though management is working toward enhancing this segment, full recovery is likely to take time.
What to Expect?
Nonetheless, management remains pleased with solid growth at its Luxury business and ongoing momentum at the Professional Beauty segment. We expect these factors, the aforementioned growth drivers and a sturdy brand portfolio to help Coty counter the softness at its consumer beauty unit and continue with its solid performance. In third-quarter fiscal 2018, both top and bottom lines surpassed the respective Zacks Consensus Estimate and the former also improved year over year. Notably, this marked the company’s third and fifth straight quarter of earnings and sales beat, respectively. While earnings were backed by strong sales and improved gross margin fueled by solid cost control, sales gained from buyouts and brand strength. The company remains optimistic about the ongoing synergies from buyouts, which have been solidifying its portfolio. The company expects modest net revenue growth in the second half of fiscal 2018. Management also expects healthy margin improvement, with maximum contributions coming from the fourth quarter.
The Zacks Consensus Estimate for sales is pegged at $2,305 million, up 2.9% from the year-ago figure. Further, the consensus mark for earnings stands at 14 cents compared with breakeven results reported in the fourth quarter of fiscal 2017.
What Does the Zacks Model Unveil?
However, our proven model doesn’t show thatCotyis likely to beat bottom-line estimates this quarter. For this to happen, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Though Coty carries a Zacks Rank #3, its Earnings ESP of -1.82% makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>