COTY Slaps Lipstick on a Porcine Profit (COTY)

It’s not our habit to pick fights with people we don’t know.

On the other hand, we do feel a duty to take down those of a more arrogant nature in this world—and those who support them.

In other words, we’ve got a wide cast of targets available.

The beauty industry is where today’s bombs are falling, and not just because it plays on people’s weakness and their need for a false sense of self-worth.

We also found one of their component stocks to be so ‘made up’ and caked-on with bullish fakery that we swore we couldn’t allow her to continue strumpet-like down the NYSE runway.

AU CONTRAIRE

The company, as you’ve already discerned, is Coty, Inc. (NYSE:COTY) purveyors of scents and paints for the proper airbrushing of the human body.

The stock has seen massive gains in the last several months, but now it appears the rush to buy was completely cosmetic.

Consider the numbers—

Fundamentals

• Get a load of this: P/E is 83.95, while Forward P/E is just 24.27.  What’s it mean?  Consensus is expecting price to drop by two thirds a year from now, or earnings to bust higher by a factor of 3.3x.  You choose!
• The stock offers no dividend.
• Price to Book is 2.51.
• Debt to Equity is on the high side at 1.20, and interest payments aren’t amply covered by earnings.
• Sales for the past five years have SUNK by 7.10% per annum, although…
• Last week’s earnings announcement featured a strong Q/Q EPS.  Unfortunately for the bulls, the stock has gone nowhere since.

Beyond that, the numbers were no more impressive than a drag queen has-been.

Look at the chart—

Let the Heavenly Court Decide!

With kind regards,

Hugh L. O’Haynew

Follow @HughLOHaynew