COTY

Coty Inc

Consumer


Presented:10/03/2019
Price:$10.24
Cap:$7.72B
Current Price:$8.18
Cap:$7.10B

Presented

Date10/03/2019
Price$10.24
Market Cap$7.72B
Ent Value$17.81B
P/E RatioN/A
Book Value$6.08
Div Yield4.88%
Shares O/S754.26M
Ave Daily Vol4,727,742
Short Int9.79%

Current

Price$8.18
Market Cap$7.10B
Coty, Inc. engages in the manufacture, market, sale, and distribution of branded beauty products. It operates through the following segments: Consumer Beauty, Luxury, and Professional Beauty. The Consumer Beauty segment offers color cosmetics, retail hair coloring and styling products, body care, and mass fragrances. The Luxury segment comprises of prestige fragrances, premium skincare, and premium cosmetics. The Professional Beauty segment consists hair and nail care products for salon professionals. The company was founded by Francois Coty in 1904 and is headquartered in New York, NY.

Publicly traded companies mentioned herein: Amazon.com Inc (AMZN), Burberry Group PLC (BRBY LN), Coty Inc (COTY), Interparfums SA (ITP FP), LVMH Moet Hennessy Louis Vuitton SE (MC FP), Procter & Gamble Co/The (PG), Ulta Beauty Inc (ULTA), Walmart Inc (WMT)

Highlights

The presenter is short shares of Coty Inc (COTY), which operates in the consumer beauty, luxury beauty, and professional beauty segments. Despite share price appreciation of ~25% YTD, he thinks the company faces major structural challenges, as well as operational challenges, that it will not be able to overcome. For this reason, he sees MSD%+ downside to EBIT and considers its current ~15x EBIT multiple expensive. For a business with the issues COTY is facing, he finds a 9% – 10% FCF yield more appropriate and estimates 30% – 40% downside to $6 – $7 over the next 12 months. 

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Idea Discussion

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