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COTY Placed Well for 2024 on Solid Beauty Trends, Strategies
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Coty Inc. (COTY - Free Report) is likely to continue experiencing gains from the growing beauty market. Growth in the beauty industry has boomed in recent years due to greater attention to physical well-being, and Coty is positioned well to leverage these trends.
The company has been focused on its six strategic pillars. These include stabilizing Consumer Beauty make-up brands and mass fragrances, accelerating luxury fragrances and setting up Coty as a core player in prestige make-up, establishing a skincare portfolio in prestige and mass channels, strengthening e-commerce and Direct-to-Consumer (DTC) capabilities, growing presence in China via Prestige and certain Consumer Beauty brands and setting Coty as an industry leader in sustainability.
These upsides bode well for this Zacks Rank #3 (Hold) company in a dynamic inflationary environment.
Adding Leaves to the Growth Story
Coty is on track with repositioning campaigns and disruptive advertising. The company has been reaping the benefits of the booming global prestige fragrance market. In the first quarter of fiscal 2024, demand for prestige fragrances across North America and Europe continued to grow. In the quarter, Coty’s e-commerce sales across the Consumer Beauty business grew strongly year over year.
Coty is on track to fuel its Digital momentum across key areas like social commerce, e-retail and new partnerships. Apart from these, the company continues to witness impressive momentum in Travel Retail sales. The company’s Travel Retail business witnessed over 20% growth in the first quarter of fiscal 2024, driven by the continued recovery of international travel and Coty's expansion in the travel retail channel.
Coty has been witnessing strength in the Prestige and Consumer Beauty segments, which helped fuel like-for-like (LFL) revenue growth of 18% in the first quarter. These upsides, along with continued gains from strategic collaborations, bode well for 2024.
Image Source: Zacks Investment Research
2024 Picture Looks Bright
With the ongoing premiumization trends, management continues to witness strength in the beauty market. The company is gaining on such favorable trends, with momentum in the core categories, an impressive innovation pipeline and early wins across important white spaces. On its first-quarter earnings call, COTY raised its view for the first half and fiscal 2024.
For the first half of fiscal 2024, the company’s core LFL sales are expected to grow in the range of 11-13%, higher than the earlier outlook of 10-12% growth. Both the Prestige and Consumer Beauty segments are seeing sequential growth. Consequently, management anticipates core LFL sales growth in the range of 9-11% for fiscal 2024, surpassing its earlier guidance of 8-10% growth.
The company anticipates modest fiscal 2024 gross margin expansion on a year-over-year basis, with a substantial increase in the back half of fiscal 2024. For fiscal 2024, COTY expects an adjusted EBITDA margin expansion of 10-30 bps, with the same performance during the first and second half. The company projects fiscal 2024 adjusted EBITDA in the range of $1,080-$1,090 million, up from the previous guidance of $1,075-$1,085 million.
It envisions fiscal 2024 adjusted EPS, excluding equity swap, in the band of 44-47 cents, reflecting growth of 16-25% year over year. The company is dedicated to achieving its medium-term growth plan, which encompasses achieving a CAGR in the mid-20s percent for earnings per share (EPS) through profit growth, reduced interest expenses and a medium-term goal of managing the share count around 800 million.
Shares of COTY have increased 9.4% in the past three months, outpacing the industry’s growth of 2.4%.
The Zacks Consensus Estimate for Sysco’s current fiscal-year sales and earnings suggests growth of 4.1% and nearly 8%, respectively, from the year-ago reported numbers.
Ingredion Incorporated (INGR - Free Report) , which produces and sells sweeteners, starches, nutrition ingredients and biomaterial solutions, holds a Zacks Rank #2. INGR delivered a positive earnings surprise of 23.9% in the last reported quarter.
The Zacks Consensus Estimate for Ingredion Incorporated’s current financial-year sales and earnings suggests growth of around 5% and 24.7%, respectively, from the year-ago reported numbers.
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently has a Zacks Rank #2. VITL has a trailing four-quarter earnings surprise of 145%, on average.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales suggests growth of 29.4% from the year-ago reported figure.
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COTY Placed Well for 2024 on Solid Beauty Trends, Strategies
Coty Inc. (COTY - Free Report) is likely to continue experiencing gains from the growing beauty market. Growth in the beauty industry has boomed in recent years due to greater attention to physical well-being, and Coty is positioned well to leverage these trends.
The company has been focused on its six strategic pillars. These include stabilizing Consumer Beauty make-up brands and mass fragrances, accelerating luxury fragrances and setting up Coty as a core player in prestige make-up, establishing a skincare portfolio in prestige and mass channels, strengthening e-commerce and Direct-to-Consumer (DTC) capabilities, growing presence in China via Prestige and certain Consumer Beauty brands and setting Coty as an industry leader in sustainability.
These upsides bode well for this Zacks Rank #3 (Hold) company in a dynamic inflationary environment.
Adding Leaves to the Growth Story
Coty is on track with repositioning campaigns and disruptive advertising. The company has been reaping the benefits of the booming global prestige fragrance market. In the first quarter of fiscal 2024, demand for prestige fragrances across North America and Europe continued to grow. In the quarter, Coty’s e-commerce sales across the Consumer Beauty business grew strongly year over year.
Coty is on track to fuel its Digital momentum across key areas like social commerce, e-retail and new partnerships. Apart from these, the company continues to witness impressive momentum in Travel Retail sales. The company’s Travel Retail business witnessed over 20% growth in the first quarter of fiscal 2024, driven by the continued recovery of international travel and Coty's expansion in the travel retail channel.
Coty has been witnessing strength in the Prestige and Consumer Beauty segments, which helped fuel like-for-like (LFL) revenue growth of 18% in the first quarter. These upsides, along with continued gains from strategic collaborations, bode well for 2024.
Image Source: Zacks Investment Research
2024 Picture Looks Bright
With the ongoing premiumization trends, management continues to witness strength in the beauty market. The company is gaining on such favorable trends, with momentum in the core categories, an impressive innovation pipeline and early wins across important white spaces. On its first-quarter earnings call, COTY raised its view for the first half and fiscal 2024.
For the first half of fiscal 2024, the company’s core LFL sales are expected to grow in the range of 11-13%, higher than the earlier outlook of 10-12% growth. Both the Prestige and Consumer Beauty segments are seeing sequential growth. Consequently, management anticipates core LFL sales growth in the range of 9-11% for fiscal 2024, surpassing its earlier guidance of 8-10% growth.
The company anticipates modest fiscal 2024 gross margin expansion on a year-over-year basis, with a substantial increase in the back half of fiscal 2024. For fiscal 2024, COTY expects an adjusted EBITDA margin expansion of 10-30 bps, with the same performance during the first and second half. The company projects fiscal 2024 adjusted EBITDA in the range of $1,080-$1,090 million, up from the previous guidance of $1,075-$1,085 million.
It envisions fiscal 2024 adjusted EPS, excluding equity swap, in the band of 44-47 cents, reflecting growth of 16-25% year over year. The company is dedicated to achieving its medium-term growth plan, which encompasses achieving a CAGR in the mid-20s percent for earnings per share (EPS) through profit growth, reduced interest expenses and a medium-term goal of managing the share count around 800 million.
Shares of COTY have increased 9.4% in the past three months, outpacing the industry’s growth of 2.4%.
3 Promising Bets From the Staple Space
Sysco Corporation (SYY - Free Report) , a food and related product company, currently carries a Zacks Rank #2 (Buy). SYY delivered a back-to-back positive earnings surprise in the past two quarters. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Sysco’s current fiscal-year sales and earnings suggests growth of 4.1% and nearly 8%, respectively, from the year-ago reported numbers.
Ingredion Incorporated (INGR - Free Report) , which produces and sells sweeteners, starches, nutrition ingredients and biomaterial solutions, holds a Zacks Rank #2. INGR delivered a positive earnings surprise of 23.9% in the last reported quarter.
The Zacks Consensus Estimate for Ingredion Incorporated’s current financial-year sales and earnings suggests growth of around 5% and 24.7%, respectively, from the year-ago reported numbers.
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently has a Zacks Rank #2. VITL has a trailing four-quarter earnings surprise of 145%, on average.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales suggests growth of 29.4% from the year-ago reported figure.