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Coty Inc. (COTY - Free Report) recently announced a significant expansion of its share repurchase program. The company’s board of directors approved an additional share buyback of $600 million. This, along with the $396.8 million left under the existing program, brings the total share repurchase authority close to a substantial $1 billion.
With this share repurchase authorization, the company intends to hedge a planned share repurchase transaction of an additional 25 million shares in fiscal 2026. The latest move comes in addition to the company’s earlier announced hedge transactions for planned repurchases of 27 million and 23 million shares in third-quarter fiscal 2024 and fiscal 2025, respectively. As noted, COTY aims to reduce its diluted share count to approximately 800 million by fiscal 2026.
Share repurchases are often viewed as a strategic approach to demonstrate a company's belief in its value and commitment to enhancing shareholder returns. A company’s share repurchase activities send a signal to the market that it perceives the current stock price as undervalued and sees a positive trajectory for future earnings.
What’s More?
Coty has been witnessing strength in its Prestige and Consumer Beauty businesses, which boosted its first-quarter fiscal 2024 results. In the quarter, revenues from the company’s Prestige segment increased 23% year-over-year to $1,064.7 million. The increase was driven by strength in the prestige fragrance category, owing to the continued success of fragrance brands like Burberry, Hugo Boss, Calvin Klein and Gucci.
The Consumer Beauty segment’s revenues also rose 10% year over year to $576.7 million, driven by solid momentum across its color cosmetics, mass fragrance, mass skin and body care categories.
Image Source: Zacks Investment Research
This Zacks Rank #3 (Hold) company’s shares have gained 1.2% in the past month against the industry’s decline of 12.8%.
However, the company has been witnessing rising operating costs and a dynamic supply chain environment. In the first quarter of fiscal 2024, the company’s cost of sales increased by 20% to $599.5 million from the year-ago quarter. If not controlled, a rise in costs and operating expenses might dent the company’s margins and profitability in the quarters ahead.
Some Better-Ranked Staple Bets
Here, we have highlighted three better-ranked stocks, namely Lamb Weston (LW - Free Report) , Post Holdings (POST - Free Report) and Procter & Gamble (PG - Free Report) .
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggest growth of 28.3% and 24.8%, respectively, from the year-ago reported numbers.
Post Holdings currently has a Zacks Rank #2 (Buy). POST has a trailing four-quarter earnings surprise of 59.6%, on average. The Zacks Consensus Estimate for Post Holdings’ current financial-year sales and earnings suggest growth of 13.3% and 201.8% from the year-ago reported figures.
Procter & Gamble currently has a Zacks Rank #2. PG has a trailing four-quarter earnings surprise of 3.8%, on average. The Zacks Consensus Estimate for Procter & Gamble’s current financial-year sales and earnings suggest growth of 4% and 8.8%, respectively, from the year-ago reported figures.
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COTY Declares Share Repurchase Authorization Worth $600M
Coty Inc. (COTY - Free Report) recently announced a significant expansion of its share repurchase program. The company’s board of directors approved an additional share buyback of $600 million. This, along with the $396.8 million left under the existing program, brings the total share repurchase authority close to a substantial $1 billion.
With this share repurchase authorization, the company intends to hedge a planned share repurchase transaction of an additional 25 million shares in fiscal 2026. The latest move comes in addition to the company’s earlier announced hedge transactions for planned repurchases of 27 million and 23 million shares in third-quarter fiscal 2024 and fiscal 2025, respectively. As noted, COTY aims to reduce its diluted share count to approximately 800 million by fiscal 2026.
Share repurchases are often viewed as a strategic approach to demonstrate a company's belief in its value and commitment to enhancing shareholder returns. A company’s share repurchase activities send a signal to the market that it perceives the current stock price as undervalued and sees a positive trajectory for future earnings.
What’s More?
Coty has been witnessing strength in its Prestige and Consumer Beauty businesses, which boosted its first-quarter fiscal 2024 results. In the quarter, revenues from the company’s Prestige segment increased 23% year-over-year to $1,064.7 million. The increase was driven by strength in the prestige fragrance category, owing to the continued success of fragrance brands like Burberry, Hugo Boss, Calvin Klein and Gucci.
The Consumer Beauty segment’s revenues also rose 10% year over year to $576.7 million, driven by solid momentum across its color cosmetics, mass fragrance, mass skin and body care categories.
Image Source: Zacks Investment Research
This Zacks Rank #3 (Hold) company’s shares have gained 1.2% in the past month against the industry’s decline of 12.8%.
However, the company has been witnessing rising operating costs and a dynamic supply chain environment. In the first quarter of fiscal 2024, the company’s cost of sales increased by 20% to $599.5 million from the year-ago quarter. If not controlled, a rise in costs and operating expenses might dent the company’s margins and profitability in the quarters ahead.
Some Better-Ranked Staple Bets
Here, we have highlighted three better-ranked stocks, namely Lamb Weston (LW - Free Report) , Post Holdings (POST - Free Report) and Procter & Gamble (PG - Free Report) .
Lamb Weston currently sports a Zacks Rank #1 (Strong Buy). LW has a trailing four-quarter earnings surprise of 46.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggest growth of 28.3% and 24.8%, respectively, from the year-ago reported numbers.
Post Holdings currently has a Zacks Rank #2 (Buy). POST has a trailing four-quarter earnings surprise of 59.6%, on average. The Zacks Consensus Estimate for Post Holdings’ current financial-year sales and earnings suggest growth of 13.3% and 201.8% from the year-ago reported figures.
Procter & Gamble currently has a Zacks Rank #2. PG has a trailing four-quarter earnings surprise of 3.8%, on average. The Zacks Consensus Estimate for Procter & Gamble’s current financial-year sales and earnings suggest growth of 4% and 8.8%, respectively, from the year-ago reported figures.