In the dynamic global cosmetics industry, Sally Beauty Holdings, Inc. ((SBH Quick QuoteSBH - Free Report) ) and Coty Inc. ((COTY Quick QuoteCOTY - Free Report) ) represent two distinct business models competing for beauty consumers. Sally Beauty focuses on specialty retail and professional beauty supply distribution, while Coty operates as a brand-driven manufacturer spanning fragrances, cosmetics and skincare, selling through mass, prestige and digital channels worldwide.

At first glance, Sally Beauty and Coty may appear to benefit from the same beauty tailwinds, but beneath the surface, they tell very different stories. From how they reach consumers to where profits are generated, and risks emerge, each company reflects a distinct approach to winning in beauty. A closer look across key operating dimensions highlights how these differences could shape performance in 2026.

SBH and COTY: Where They Compete in Beauty

Sally Beauty operates in the professional and specialty beauty retail segment, with a network of 4,422 stores globally serving both DIY consumers and licensed professionals. Hair color remains the company’s largest and most resilient category, supporting relatively stable demand and traffic even as broader discretionary spending across beauty remains pressured.

Coty, in contrast, is a global beauty manufacturer with products sold in more than 130 countries. Fragrance represents the company’s core strength and largest category, reinforcing Coty’s position as a leading global player in scent. This exposure has continued to support performance, even as color cosmetics and consumer beauty categories experience more volatile demand trends across regions.

SBH vs. COTY: A Tale of Two Growth Strategies

Sally Beauty’s strategy emphasizes consistency and efficiency over rapid expansion. In the fourth quarter of fiscal 2025, the company delivered 1.3% consolidated comparable sales growth while expanding gross margins to 52.2%, supported by higher margins across both business segments and benefits from the fuel for growth program. This disciplined execution has enabled continued debt reduction and shareholder returns, while still supporting reinvestment in the business.

COTY is pursuing a more transformational approach, positioning itself as a global “fragrance and scenting powerhouse.” Management highlighted mid-single-digit growth in its prestige fragrance category in the first quarter of fiscal 2026 and ongoing integration of prestige and mass fragrance operations, alongside a strategic review of its consumer beauty portfolio aimed at improving returns and reducing earnings volatility.

SBH & COTY: Digital Strategy and Omnichannel Execution

Digital sales are a growing but controlled channel for Sally Beauty, with global e-commerce contributing 11.1% of net sales in the fourth quarter of fiscal 2025. The company continues to invest in omnichannel capabilities that support both retail and professional customers, while prioritizing profitability and customer lifetime value over aggressive online discounting.

For COTY, digital is a larger growth lever, with e-commerce representing around 20% of the company’s sales. The company is expanding partnerships across global e-commerce and social commerce platforms, particularly for prestige fragrance brands, using digital channels to accelerate new launches and strengthen brand engagement in key markets.

SBH vs. COTY: Financial Performance, Risks & Outlook

Sally Beauty exited fiscal 2025 with improved profitability and strong cash generation. In the fiscal fourth quarter, consolidated net sales and comparable sales both rose 1.3%, driving 10% increase in year-over-year adjusted EPS growth. Fiscal 2025 free cash flow reached $216 million, supporting debt reduction, share repurchases and reinvestment, with net leverage ending the year at a manageable 1.6x.

Looking ahead, SBH guided for flat to modest comparable sales growth in fiscal 2026, with continued earnings stability, supported by its core hair color category and ongoing fuel for growth initiatives. While discretionary spending and professional demand remain watch points, SBH’s strong cash generation and disciplined outlook support solid earnings visibility.

Coty’s near-term financial profile reflects a business in transition, with pressure in fiscal 2026’s first half giving way to an expected recovery later in the year. In the first quarter of fiscal 2026, net revenues declined 8% on a like-for-like basis, due to softness in Consumer Beauty, while adjusted EBITDA fell 18% year over year and gross margin compressed 100 basis points to 64.5%, partly due to tariffs.

However, COTY expects sequential improvement through the year, forecasting a return to sales growth and adjusted EBITDA growth in the second half, supported by blockbuster fragrance launches, inventory normalization, and roughly $200 million in productivity and fixed-cost savings in fiscal 2026. Ongoing Consumer Beauty restructuring remains a watch point, but improving U.S. execution, sustained fragrance demand, and planned deleveraging actions, including potential Wella monetization, support a more stable earnings outlook into 2026.

How Does the Zacks Consensus Estimate Compare for SBH & COTY?

The Zacks Consensus Estimate for Sally Beauty’s fiscal 2026 and 2027 EPS indicates a year-over-year increase of around 8.4% and 10.5%, respectively. The consensus estimate for SBH’s fiscal 2026 EPS has inched up 1 cent in the past 30 days to $2.06, while the same for fiscal 2027 has remained unchanged at $2.28.

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The Zacks Consensus Estimate for Coty’s fiscal 2026 and 2027 EPS indicates a year-over-year increase of around 90.9% and 16.2%, respectively. The consensus estimate for COTY’s fiscal 2026 EPS has inched down 1 cent in the past 30 days to 42 cents, while the same for fiscal 2027 has remained unchanged at 49 cents.

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Price Performance & Valuation of SBH & COTY

Over the past year, shares of Sally Beauty have gained 24.3%, while Coty has seen a 53.4% decline. Currently, SBH trades at $15.07, about 13.4% below its 52-week high. COTY, at $3.26, sits 57.7% below its peak.

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Sally Beauty is trading at a forward 12-month price-to-earnings (P/E) ratio of 7.14, above its one-year median of 5.51. Meanwhile, Coty’s forward P/E ratio stands at 7.23, below its median of 9.94.

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SBH vs. COTY: Which Stock Looks More Promising Now?

Among the two beauty players, Sally Beauty stands out as the more attractive near-term opportunity. Its focus on professional hair color, disciplined cost control, strong free cash flow generation, and reduced leverage supports stable earnings and downside protection, even amid pressured discretionary spending. Coty, while offering longer-term upside through its fragrance leadership and digital expansion, remains in a transitional phase with higher volatility tied to Consumer Beauty restructuring and margin pressure. For investors prioritizing earnings visibility and consistency heading into 2026, SBH appears better positioned, earning a Zacks Rank #2 (Buy), while COTY’s Zacks Rank #3 (Hold) reflects a wait-and-see stance as its turnaround unfolds. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.