Coty Inc. COTY is likely to register top and bottom-line growth when it reports third-quarter fiscal 2023 earnings on May 9. The Zacks Consensus Estimate for revenues is pegged at $1.2 billion, suggesting an increase of 3.6% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for Coty’s fiscal third-quarter bottom line has moved up 66.7% in the past seven days to 5 cents per share. The projection indicates an increase of 66.7% from the year-ago quarter’s reported figure. The cosmetics company has a trailing four-quarter earnings surprise of 24.2%, on average. In the last reported quarter, the company delivered an earnings surprise of 46.7%.
We expect fiscal third-quarter net revenues to decrease 0.5% year over year to $1,180.2 million and the bottom line to decline 29.5% to 2 cents a share.
Factors to Consider
Coty has been benefiting from its focus on six strategic pillars aimed at sustainable growth. These include stabilizing Consumer Beauty make-up brands and mass fragrances; accelerating luxury fragrances and setting up Coty as a core player in prestige make-up; establishing a skincare portfolio in prestige and mass channels; strengthening e-commerce and Direct-to-Consumer capabilities; growing presence in China via Prestige and certain Consumer Beauty brands; and setting Coty as an industry leader in sustainability.
Coty has been reaping benefits from the booming global prestige fragrance market. The company has been growing its skincare business across both divisions with brands like Lancaster and SKKN BY KIM. It has been on track to fuel its digital momentum across key areas like social commerce, e-retail and new partnerships. Apart from these, it has been witnessing impressive momentum in Travel Retail sales.
The company has been making efforts to optimize the overall cost structure. It has been progressing well with the All In to Win transformation program across five key work areas, driving notable improvement in costs, gross margins, sales growth and cash. Also, COTY has been committed to its savings initiatives, pricing actions and persistent premiumization to counter inflationary headwinds.
In its last earnings report, management raised its like-for-like (LFL) sales view for fiscal 2023. The company’s third-quarter core LFL sales growth is tracking at 10%, up from a 7% increase witnessed in the second quarter. Notably, the Prestige and Consumer Beauty segments have been witnessing sequential growth.
However, the company has been reeling under inflation and supply-chain disruptions. Industry-wide supply constraints in major fragrance components like glass bottles, pumps and caps are likely to have acted as deterrents. Also, adverse currency fluctuations are likely to have been concerning.
Coty Price and EPS Surprise
Coty price-eps-surprise | Coty Quote
What the Zacks Model Unveils
Our proven model predicts 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Coty currently has a Zacks Rank #2 and an Earnings ESP of +60.97%.
Other Stocks Poised to Beat Earnings Estimates
Here are three other companies that you may want to consider, as our model shows they these, too, have the right combination of elements to post an earnings beat:
Tyson Foods TSN has an Earnings ESP of +1.85% and currently has a Zacks Rank #3. TSN is scheduled to report second-quarter fiscal 2023 earnings on May 8. The Zacks Consensus Estimate for its quarterly revenues is pegged at $13.6 billion, which suggests growth of 3.7% from the figure reported in the prior-year quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Tyson’s quarterly earnings has moved up 3.8% in the past seven days to 81 cents per share, suggesting growth of 64.6% from the year-ago quarter’s reported number. TSN’s earnings beat the consensus estimate in the trailing four quarters, delivering a negative earnings surprise of 3.6%, on average.
Celsius Holdings, Inc. CELH, likely to release first-quarter 2023 earnings on May 9, currently has an Earnings ESP of +32.28% and a Zacks Rank of 3. The Zacks Consensus Estimate for its quarterly revenues is pegged at $223 million, which suggests growth of 67.2% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Celsius’ quarterly earnings has moved up by a penny in the past 30 days at 21 cents per share, suggesting growth of 133.3% from the year-ago quarter’s reported number. CELH has a trailing four-quarter negative earnings surprise of 69.6%, on average.
TreeHouse Foods THS has an Earnings ESP of +19.75% and a Zacks Rank of 3 at present. The company is slated to report first-quarter 2023 results on May 8. The Zacks Consensus Estimate for its quarterly revenues is pegged at $849.03 million, which suggests a decline of 25.6% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for TreeHouse’s quarterly earnings has moved up 5.4% in the past 30 days to 39 cents per share, suggesting growth of 360% from the year-ago quarter’s reported number. THS’ earnings beat the consensus estimate in the trailing four quarters, delivering an earnings surprise of 48.8%, on average.
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