Please ensure Javascript is enabled for purposes of website accessibility

Why Coty Inc. Stock Jumped Thursday

By Daniel Sparks - Feb 8, 2018 at 1:24PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

In an all-around excellent quarter, Coty delivered organic top-line growth. Here's what investors should know.

What happened

Shares of beauty products company Coty (COTY -1.61%) jumped as much as 15.8% Thursday after the company reported better-than-expected revenue and adjusted earnings per share for its second quarter of fiscal year 2018. The stock is up 11.9% at the time of this writing.

Coty's revenue and adjusted EPS were well above consensus analyst estimates for the quarter. Second-quarter revenue and adjusted earnings per share were $2.64 billion and $0.32, respectively. On average, analysts were expecting revenue and adjusted EPS of about $2.47 billion and $0.23, respectively. 

Bottles of different colored nail polish.

Image source: Getty Images.

So what

Commenting on the quarter's results, Coty CEO Camillo Pane said, "Q2 was a very strong quarter marked by Coty's return to organic top-line growth."

Total second-quarter revenue was up 14.8% year over year. Organic revenue during the quarter was up 2.8% year over year. This compares to a 2% year-over-year decline in organic revenue in Coty's first quarter of fiscal year 2018. 

Key drivers during the quarter were growth in luxury, acceleration in its momentum in professional beauty, and "a significant improvement in Consumer Beauty," Pane said.

Coty also said e-commerce performed "ahead of the market...."

Now what

Coty's solid second-quarter performance prompted management to adopt a more optimistic outlook for the rest of fiscal year 2018.

"Based on the much improved results to date, we have refined our revenue growth objectives for the remainder of the fiscal year," Pane said. "While revenue recovery will not be a straight line, we now aim to deliver positive but modest net revenue growth for the second half of the year."

Throughout 2018, investors should look for more organic revenue growth, continued execution on Coty's e-commerce initiatives, and more strong performance from the company's recent acquisitions of Yonique, Burberry, and ghd. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Coty Inc. Stock Quote
Coty Inc.
$7.64 (-1.61%) $0.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.