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Will Coty Earnings Satisfy IPO Investors?

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Coty (NYSE: COTY  ) will release its quarterly report on Tuesday, and investors are anxiously waiting to see how the company did in its first quarter as a public company. After a disappointing IPO, it'll take some strong results from Coty earnings to turn the slumping stock around, and drive some positive momentum for the shares.

Coty makes and distributes a wide variety of personal-care products, ranging from cosmetics to skin- and body-care lines. With research and manufacturing facilities in the U.K., China, and several countries on the European mainland, as well as its domestic operations, Coty has the infrastructure in place to take advantage of global sales opportunities. Let's take an early look at what's been happening with Coty over the past quarter, and what we're likely to see in its report.

Stats on Coty

Analyst EPS Estimate


Year-Ago EPS


Revenue Estimate

$1.05 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance. N/A = not applicable; this is Coty's first report since going public.

Will Coty earnings look pretty this quarter?
Even in the few months since the company's IPO, analysts have gotten more optimistic about the prospects for Coty earnings. They've reversed early expectations for a $0.01 per-share loss in the June quarter, and have boosted their views for the 2014 fiscal year by $0.05 per share. Yet, the stock hasn't responded well, falling another 9% from its first-day close in mid-June.

Coty's IPO didn't go nearly as well as the company had hoped. Despite raising more than $1 billion, the IPO merely facilitated the sale of private investors' stakes in the company rather than giving Coty any additional working capital for its business.

But part of the reason for the IPO's tepid reception likely came from Coty's failed attempts to acquire Avon Products (NYSE: AVP  ) . Coty ended up making multiple bids for Avon, with its higher bid putting a $10.7-billion price tag on the potential buyout. Yet, Coty wasn't able to reach a deal with Avon, and ended up withdrawing the bid.

What's particularly disappointing, though, is that some of Coty's competitors in the fragrance and cosmetics area have done quite well lately. Estee Lauder (NYSE: EL  ) has seen strong growth in its skin-care and makeup product lines, with the company having successfully boosted operating margins, and overcoming some macroeconomic headwinds in areas like southern Europe. Estee Lauder has also looked to Africa for expansion opportunities, an area where Coty doesn't have a strong presence, demonstrating the importance of emerging markets to overall growth potential.

Still, the space has challenges for Coty. Elizabeth Arden (NASDAQ: RDEN  ) has been taking steps to reenergize its brand, going through a transitional year that has hurt its stock price. Despite its well-known name, Arden's substantial debt has held the company back -- yet Coty has a lot more debt on its balance sheet.

In the Coty earnings report, watch to see how investors react to the quality of the company's first quarterly presentation. By getting a sense of how company leaders make their case for Coty, you should be able to decide if Coty has what it takes to recover from its sluggish start in the public markets.

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