COTY - Embedded Expectations Analysis - 2020 10 27
Coty Inc. (COTY:USA) currently trades near recent averages relative to UAFRS-based (Uniform) assets, with a 5.7x Uniform P/B. At these levels, the market has bullish expectations for the firm, but management may have concerns about brand strength, supply network optimization, and the Wella divestitureSpecifically, management may lack confidence in their ability to continue reducing costs and improve and strengthen their strong heritage and direct-to-consumer brands. They may also have concerns about the potential of the Kylie Beauty and Kim Kardashian West brands, as well as their ability to develop strong skincare segments for these brands. Management may also lack confidence in their ability to optimize the use of their supply network and existing plants, secure investments that would fuel revenue growth, and address concerns regarding their investors, shareholders, and the company. Furthermore, they may have concerns about the impact of the Wella divestiture and their ability to close said transaction
Coty and its subsidiaries are a beauty company. The company manufactures, markets, sells and distributes beauty products, including fragrances, color cosmetics, hair care products and skin and body related products. The company is organized into three divisions, which is also its operating and reportable segments: Consumer Beauty, Luxury and Professional Beauty. Consumer Beauty is primarily focused on color cosmetics, retail hair coloring and styling products, body care and mass fragrances. Luxury is primarily focused on fragrances, skincare and cosmetics. Professional Beauty is primarily focused on hair and nail care products for salon personnel.
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
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- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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