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what it is
Coty sells perfume, makeup, and skin care through brands like Calvin Klein, Gucci, CoverGirl, and Vera Wang.
how it gets paid
Last year Coty made $5.9B in revenue. Fragrances was the main engine at $3.95B, or 67% of sales.
why growth slowed
Revenue fell 3.7% last year. What’s more, management anticipates that the third-quarter gross margin will decline by 200 to 300 basis points vs. prior year, which will put significant pressure.
what just happened
Coty's latest quarter put $3.3B of revenue on the board, but reported EPS was -$0.07.
At a glance
B balance sheet — gets the job done, barely
25/100 earnings predictability — expect surprises
11.8x trailing p/e — the market's not buying it — or you found a deal
7.0% return on capital — nothing to write home about
$0.40 fy2027 eps est
xvary composite: 49/100 — below average
What they do
Coty sells perfume, makeup, and skin care through brands like Calvin Klein, Gucci, CoverGirl, and Vera Wang.
Fragrances were 67% of fiscal 2025 revenue, versus 24% for color cosmetics and 9% for skin and body care. That 67% mix matters because 67% of your sales sitting in one category gives Coty one familiar lane to defend. Coty also operates in 36 countries with 11,636 employees, so Calvin Klein, Gucci, and CoverGirl can hit a lot of shelves at once.
How they make money
$5.9B
annual revenue · their business grew -3.7% last year
Fragrances
$3.95B
Color Cosmetics
$1.42B
Skin/Body Care
$0.53B
The products that matter
licensed fragrance brand
Calvin Klein
part of a $5.9B portfolio
this sits inside the same $5.9B revenue base that still posts 64.1% gross margin. The portfolio has pricing power. The question is whether it can grow again.
brand equity
sports-branded fragrance line
adidas
inside a 18.5% operating margin business
adidas matters because Coty sells aspiration at scale. An 18.5% operating margin tells you the shelf still pays, even if total revenue fell 3.7% last year.
scale brand
mass fragrance portfolio
Nautica
part of a $2B equity story
the brand list is broad, but the market only values the whole company at roughly $2B. That's why execution matters more here than brand nostalgia.
turnaround watch
Key numbers
$5
18-mo target
sees the stock almost doubling from $2.59 to $5, which is a rare gap between the tape and the math.
64.1%
gross margin
That is high enough to keep the business alive, but not high enough to hide weak EPS.
$3.0B
long debt
Debt equals 56% of capital, so the balance sheet is doing more work than the stock price admits.
11.8x
trailing P/E
You are paying 11.8 times trailing earnings for a company with 4.1% operating margin.
Financial health
B
strength
- balance sheet grade B — adequate — nothing special
- risk rank 3 — safer than 50% of stocks
- price stability 25 / 100
- long-term debt $3.0B (56% of capital)
- net profit margin 7.9% — keeps 8 cents of every dollar in revenue
- return on equity 13% — $0.13 profit for every $1 investors have put in
B — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in COTY 3 years ago → it's now worth $2,280.
The index would have given you $13,880.
source: institutional data · total return
What just happened
missed estimates
Coty's latest quarter put $3.3B of revenue on the board, but reported EPS was -$0.07.
EDGAR shows 64.1% gross margin and a 94% vs. prior year revenue jump. Yahoo consensus also shows a different EPS line at $0.14 versus $0.20 expected, so the quarter's profit picture is messy.
$3.3B
revenue
$0.07
eps
64.1%
gross margin
the number that mattered
Gross margin was 64.1%, which kept the quarter from looking worse, even as EPS stayed negative at -$0.07.
-
coty’s fiscal second-quarter (year ends june 30th) was nothing to get excited about.
-
the company posted earnings of $0.14 a share, three cents higher than the year-ago figure yet well below our estimate, on a 1% sales improvement.
-
and the outlook for the balance of the year is not too rosy, with revenues expected to decline due to weakening in consumer beauty sales trends.
-
what’s more, management anticipates that the third-quarter gross margin will decline by 200 to 300 basis points vs. prior year, which will put significant pressure on the bottom line.
-
meanwhile, the company’s strategic review of its consumer beauty business continues.all told, we have pared our earnings estimate for the current fiscal year by $0.12, to $0.28 a share and initiated a fiscal 2027 earnings call of $0.40.
source: company earnings report, 2026
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What could go wrong
the #1 risk is sales drift in a leveraged beauty portfolio.
med
debt stays heavy
$3.0B in long-term debt equals 56% of capital. That leaves less room for mistakes than the brand portfolio might suggest.
$3.0B in long-term debt equals 56% of capital. That leaves less room for mistakes than the brand portfolio might suggest.
med
revenue decline becomes the story
Revenue fell 3.7% last year. If that keeps going, the 11.8x p/e stops looking cheap and starts looking accurate.
Revenue fell 3.7% last year. If that keeps going, the 11.8x p/e stops looking cheap and starts looking accurate.
med
margins look good but returns stay weak
64.1% gross margin and 18.5% operating margin sound premium. A 7.0% return on capital says the business is not converting that premium into strong shareholder economics.
64.1% gross margin and 18.5% operating margin sound premium. A 7.0% return on capital says the business is not converting that premium into strong shareholder economics.
med
the market keeps withholding trust
Earnings predictability is only 25/100, price stability is 25/100, and institutions were net sellers again in 4q2025. Turnarounds need believers. This one still needs proof.
Earnings predictability is only 25/100, price stability is 25/100, and institutions were net sellers again in 4q2025. Turnarounds need believers. This one still needs proof.
When a $5.9B revenue business is shrinking and debt is $3.0B, even small execution misses can hit equity holders hard.
source: institutional data · regulatory filings · risk analysis
Pay attention to
balance sheet
debt needs to move down, not sideways
$3.0B in long-term debt versus a roughly $2B market cap is the number that keeps this story from feeling safe.
growth
revenue has to stop shrinking
Coty just posted a 3.7% decline in annual revenue. Flat would already be an improvement. Growth is what gets the rerating conversation started.
quality of earnings
watch return on capital, not just margin
64.1% gross margin looks great on a slide. 7.0% return on capital is what tells you whether the business is actually compounding.
next checkpoints
institutional flow and guidance need to improve together
Net selling for two consecutive quarters matters more when earnings predictability is only 25/100. You want to see the big money stop leaving before you trust the forecast.
Analyst rankings
earnings predictability
25 / 100
in human-speak, analysts do not trust this business to produce smooth, repeatable numbers yet.
risk rank
3
middle-of-the-pack safety. Safer than 50% of stocks, which is not the same thing as safe.
price stability
25 / 100
the stock has not behaved like a steady compounder. It has behaved like a turnaround that still needs evidence.
source: institutional data
Institutional activity
institutions have been net selling for 2 consecutive quarters — 94 buyers vs. 128 sellers in 4q2025. total institutional holdings: 0.3B shares. net selling for 2 quarters.
source: institutional data
Price targets
3-5 year target range
$2
$7
$3
current price
$5
target midpoint · +93% from current · 3-5yr high: $14 (+440% · 52% ann'l return)
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