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How Damaging Has Coronavirus Been to Coty's (COTY) Q3 Earnings?

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Coty Inc. (COTY - Free Report) is scheduled to report third-quarter fiscal 2020 results on May 11. The cosmetics company has a trailing four-quarter positive earnings surprise of 9.4%, on average.

The Zacks Consensus Estimate for fiscal third-quarter earnings, which is currently pegged at a penny, moved down by 4 cents over the past 30 days. Also, the consensus mark indicates a plunge of roughly 92% from a year ago. The consensus estimate for quarterly revenues stands at $1,543 million, suggesting a decline of 22.5% from the year-ago quarter level.

Coty Inc Price and EPS Surprise

Coty Inc Price and EPS Surprise

Coty Inc price-eps-surprise | Coty Inc Quote

Factors at Play

Owing to the COVID-19 crisis, the company expects net revenues for the fiscal third quarter to tumble 20% on a like-for-like basis, with considerable impact on profits. The outbreak along with Coty’s struggling Consumer Beauty segment has most likely marred performance in the to-be-reported quarter. Persistent softness in mass beauty categories and reductions in shelf space in North America have been hurting the segment’s performance. The Zacks Consensus Estimate for quarterly revenues at the Consumer Beauty unit is pinned at $657 million, indicating a decline of 21.8% year over year.

Nevertheless, the company has been making business adjustments like increasing focus on e-commerce. Moreover, transformational efforts like streamlining operations, brand investments and upgrade of systems are likely to have contributed. In addition, the Luxury segment has been a major contributor to the company’s performance.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Coty this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Coty carries a Zacks Rank #3, its Earnings ESP of -426.66% makes surprise prediction difficult.

Stocks With a Favorable Combination

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Campbell Soup Company (CPB - Free Report) has an Earnings ESP of +12.88% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

General Mills, Inc. (GIS - Free Report) currently has an Earnings ESP of +1.21% and a Zacks Rank #2.

Limoneira Company (LMNR - Free Report) currently has an Earnings ESP of +4.00% and a Zacks Rank #3.

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Campbell Soup Company (CPB) - free report >>

General Mills, Inc. (GIS) - free report >>

Limoneira Co (LMNR) - free report >>

Coty Inc. (COTY) - free report >>