COTY INC. (COTY): what the price requires
The current priced-in claim for COTY INC. (COTY) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.
Generated: 2026-07-19 · Exported: 2026-07-20 · Source: https://boothcheck.com/report/COTY
Headline
| Field | Value |
|---|---|
| Ticker | COTY |
| Company | COTY INC. |
| Current price | $2.21/sh |
| Composition | Prestige 65% / Consumer Beauty 35% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | revenue-multiple |
| EV / sales paid | 0.9x |
| Steady-state operating margin assumed | 25.9% |
The price sits below what even a 5%/yr revenue decline would warrant; the inversion reports a bound, not a solved growth path.
The company earns no operating profit yet; the inversion runs on the revenue multiple and an assumed steady-state margin.
Solve inputs: computed at a 8.2% cost of capital with 4% terminal growth over a 5-year stage, holding a 25.9% terminal operating margin (64.8% gross margin x the 40% mature-conversion prior).
How unusual the bet is: within-range (limited comparison data)
| Reference | Value |
|---|---|
| vs own history | -0.38σ |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and relative-multiple value, while earnings-power lands below the price. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 0.66x | 2 | justifies |
| Earnings | 10.50x | 1 | expensive |
| Relative | 0.41x | 2 | justifies |
| Growth | — | 0 | — |
Families that justify the price: Asset, Relative Families that call it expensive: Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 3.9%); the inversion above states its own rate.
Per-Model Detail (n=5)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $5.32 | 0.41x | no | FCF base $0.3B, growth -4% (input: historical growth), terminal g 0.5%, WACC 3.9%, 5yr projection |
| DCF Exit Multiple | Growth | $3.20 | 0.69x | no | Exit EV/EBITDA: 9.7x / 11.7x / 13.7x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $13.16 | 0.17x | yes | P/S fallback (negative EPS): Sector P/S 2.0x × TTM revenue — excluded from consensus |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $3.51 | 0.63x | yes | Reference only (book value floor): BV/sh $3.51, ROE negative |
| Two-Stage Excess Return | Asset | $3.16 | 0.70x | yes | Reference only (book value with convergence): BV/sh $3.51, ROE converges to ke |
| Discounted Future Market Cap | Growth | $1.24 | 1.78x | no | Rev $5.8B, growth -4% (input: historical growth; tapered), Terminal P/S: 0.3x / 0.3x / 0.4x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $0.00 | — | no | Negative/zero EPS — earnings-based value floored at $0 |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $6.41 | 0.34x | no | Normalized EBIT (5y avg op income, one-time charges added back) $0.44B × (1−21%) / WACC 3.9% → EPV (no growth) |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | — | — | no | — |
| EV/EBITDA Relative | Relative | $3.33 | 0.66x | yes | EBITDA $0.44B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $0.21 | 10.50x | yes | FCF $310.5M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $0.01 | 220.50x | yes | SBC-adj FCF $0.26B (FCF $0.31B − SBC $0.05B) capitalized at Kₑ (excluded from median) |
| Ben Graham Formula | Earnings | — | — | no | — |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $13.16 | 0.17x | no | Revenue $5.79B × sector P/S 2.0x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | — | — | no | — |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $2.9b |
| Interest coverage | -1.6x |
| Share count CAGR (dilution) | 0.8% |
| Burning cash | no |
Operating profit is negative or near zero and the company has no demonstrated through-cycle (mid-cycle) operating margin to normalize against, so years-to-repay cannot be computed honestly.
Bullet Takeaways
- Coty is a leveraged beauty company in turnaround mode, split between a Prestige fragrance business (about 65% of sales) and a weaker Consumer Beauty mass segment (CoverGirl, Rimmel). At $1.95 the market treats it as a deep-value, distressed recovery story, not a grower.
- The price is read against sales, not earnings, because the business is currently unprofitable: trailing operating profit is slightly negative and the company reported a net loss of $126.9M. At roughly 0.8x revenue, the multiple is so low it sits below what even a steady 5%-a-year revenue decline would warrant.
- The swing factor is the balance sheet. Coty cut net debt to about $2.6B and leverage to 2.7x using Wella sale proceeds, its lowest in nearly a decade. That deleveraging is the bull case; continued revenue decline and margin pressure are the bear case.
Bull Case
Frame the stage honestly, because it dictates how to read every number: Coty is a mature, leveraged turnaround, not a growth story, and the models route it as a distressed name for good reason. Trailing operating profit is roughly flat-to-negative, the company posted a net loss of $126.9M, and the valuation engine prices it against revenue rather than earnings. At $1.95 the stock trades at about 0.8x sales, a level so depressed that the price sits below what even a steady 5%-per-year revenue decline would justify. For a deep-value buyer, that is the setup: a real franchise priced as if it is permanently impaired.
The asset behind the price is better than the price implies. Coty's Prestige segment, about two-thirds of sales, is built on licensed luxury fragrances, and the 10-K notes that prior-year Prestige revenue growth came alongside "positive, but decelerating, market trends in most major markets" (accession 0001024305-25-000030), while Consumer Beauty improvement came from "positive performance in the color cosmetics category specifically from Rimmel" and the mass fragrance category. Fragrance has been the resilient corner of beauty, and Coty owns durable license relationships there. Book value per share near $3.51 sits above the $1.95 price, so the asset and relative-multiple lenses actually support or exceed the quote; only the earnings-power lens reads it as expensive, and that is because there are currently no earnings to capitalize.
The real bull catalyst is the balance sheet. Coty cut financial net debt to about $2.6B and leverage to 2.7x, its lowest in nearly a decade, using $750M of upfront cash from selling its remaining Wella stake to KKR to pay down long-term debt; total debt fell from about $4.07B to $3.04B. For a highly leveraged equity, deleveraging is the most powerful value lever there is, because it shifts enterprise value from creditors to shareholders. If the new Coty.Curated turnaround strategy stabilizes revenue while leverage keeps falling, the equity is a call option on a recovering beauty franchise bought below book value. The bet does not need growth; it needs the business to stop declining while the debt shrinks.
Bear Case
The macro variable with the most leverage on Coty is consumer beauty demand, and it is moving the wrong way. Management guided Q3 2026 underlying revenue to decline at a mid-single-digit rate, reported like-for-like revenue down about 3%, and withdrew its prior full-year EBITDA and free-cash-flow guidance entirely, providing only a single-quarter outlook during a leadership transition. A withdrawn guide is the clearest signal a company can send that it does not have visibility, and for a leveraged name that is exactly when the equity is most exposed. The price at $1.95 (June 27, 2026) may look cheap, but cheap compounds badly when revenue is shrinking and the company will not commit to a number.
The profitability picture underneath is deteriorating, not just soft. Coty swung to a net loss of $126.9M from a small prior-year profit, with management citing higher promotional activity, tariffs, and a worse regional mix tilted toward lower-margin markets. Consumer Beauty sales fell 2%, and the strategy of repositioning CoverGirl, after failing to win Gen Z, toward Gen X consumers is an admission that prior turnaround attempts did not work. ROE is negative near minus 17%, ROIC is negative, and the residual-income model says the current returns imply capital destruction. The earnings-power lens capitalizes free cash flow at a fraction of the price because the earnings simply are not there.
The leverage that is the bull case is also the bear case if revenue does not stabilize. Coty still carries about $2.9B of net debt against negligible operating income, so interest expense consumes most of what the business generates, and a leveraged company with declining sales is the textbook value trap. The deleveraging so far leaned heavily on the one-time Wella sale; once asset sales run out, debt reduction depends on operating cash flow, which is precisely what is under pressure. The dividend is token and below the threshold the income models even consider. The bet against Coty is straightforward: a shrinking, low-margin beauty business with meaningful debt and no committed guidance can stay cheap, or get cheaper, for a long time.
Valuation
Coty is valued against sales rather than earnings because the business is currently unprofitable: trailing operating profit is slightly negative and the projection-based methods are gated off as unreliable for a distressed firm. At $1.95 the price works out to about 0.8x revenue, a bound the engine reads as below what even a steady 5%-per-year revenue decline would warrant, while holding a normalized operating margin assumption near 26% on the gross-margin-times-conversion prior. In plain terms, the price is so low that it embeds permanent decline unless margins recover toward the business's structural potential.
The applicable methods are sparse and tell a value-supported story. The relative-multiple price-to-sales fallback lands near $13 (excluded from the consensus as a negative-EPS fallback), the EV/EBITDA-relative method near $3.33, and the book-value floor near $3.51, all above the $1.95 price. The only lens that reads the price as expensive is the FCF-yield capitalization near $0.21, which simply reflects that current free cash flow is thin. The blended X-ray near $3.51 sits above the quote, consistent with an asset-supported, distressed-recovery profile rather than a growth bet.
Book value above the share price and a sub-1x sales multiple are genuine value markers; they are also exactly what a value trap looks like when revenue keeps falling. The deciding variable is whether the Coty.Curated turnaround halts the revenue decline and lets margins and free cash flow recover while leverage continues down. If it does, the asset and sales-based methods are right. If it does not, the negative-return methods become the relevant anchor.
Catalysts
The turnaround execution is the central catalyst. Interim CEO Markus Strobel unveiled a new Coty.Curated strategy, and the leadership transition itself is a swing factor; a permanent CEO appointment and a credible reinstated guidance would be a meaningful signal. With full-year EBITDA and free-cash-flow guidance withdrawn, the next prints carry outsized weight in showing whether the business is stabilizing.
Deleveraging is the value lever to track. Coty cut net debt to about $2.6B and leverage to 2.7x using $750M of Wella sale proceeds. Continued debt reduction from operating cash flow, rather than one-time asset sales, is what would shift value to the equity. Watch the leverage ratio and any further divestitures.
The brand resets are the revenue catalysts. The Marc Jacobs Beauty relaunch, the repositioning of CoverGirl toward Gen X consumers, and focused investment in Rimmel are the moves meant to stabilize Consumer Beauty, while Prestige fragrance remains the resilient core. Quarterly like-for-like revenue, currently guided to decline mid-single digits, is the cleanest read on whether the strategy is working. Tariffs and promotional intensity are the external pressures on margin to monitor.
Sources: Coty Q2 results and debt reduction (Personal Care Insights), Coty Q3 2026 deep dive (Kavout), Coty Marc Jacobs relaunch and outlook (Timothy Sykes)
Peer Cohorts (Per Segment, With Filing Citations)
Prestige (reported)
- EL (Estee Lauder Companies Inc)
- (no filing in the citation store)
- IPAR (INTERPARFUMS, INC.)
- (no filing in the citation store)
- ELF (e.l.f. Beauty, Inc.)
- (no filing in the citation store)
- OLPX (OLAPLEX HOLDINGS, INC.)
- (no filing in the citation store)
Consumer Beauty (reported)
- ELF (e.l.f. Beauty, Inc.)
- (no filing in the citation store)
- EL (Estee Lauder Companies Inc)
- (no filing in the citation store)
- KVUE (Kenvue Inc.)
- (no filing in the citation store)
- IPAR (INTERPARFUMS, INC.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.