uploads///Q EPS preview

What Investors Expect from Coty’s Fiscal 3Q16 Earnings

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Nov. 20 2020, Updated 1:06 p.m. ET

Expected adjusted earnings

Coty’s (COTY) fiscal 3Q16 earnings will be announced on May 3, 2016. Wall Street analysts’ consensus estimate for adjusted diluted EPS (earnings per share) in fiscal 3Q16 is $0.12 per share.

The consensus estimate represents a 0.8% rise year-over-year compared to adjusted diluted EPS in fiscal 3Q15.

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Earnings versus peers

Coty’s fiscal 2Q16 earnings fell 15.5% to $0.38 compared to $0.45 in the prior year’s same quarter. The rise in EPS benefited from a favorable tax settlement of $113.3 million this year, compared to a $32.5 million settlement in the prior year’s period.

Procter & Gamble’s (PG) core adjusted EPS rose 9% to $1.04, and its reported EPS fell 1.4% in fiscal 2Q16. Avon’s (AVP) adjusted EPS also fell to $0.00 in 4Q15 compared to $0.02 in 4Q14.

For Estée Lauder (EL), diluted earnings of $1.22 rose 8% in fiscal 2Q16 compared to $1.13 in fiscal 2Q15. The rise was largely driven by a combination of better sales performance across most brands, including MAC, Smashbox, Jo Malone, and Bobbi Brown.

To learn more about Estée Lauder’s fiscal 2Q16 results, please read Estée Lauder: Beats Earnings Estimates for 18th Straight Quarter.

Expectation of EPS growth

Despite economic instability, Coty expects its EPS growth to be substantially higher due to a huge return on one-off tax benefits.

Also, excluding any synergy from its anticipated merger with PG’s Specialty Beauty Business, Coty expects its acquisition deal of Hypermarcas’s Beauty & Personal Care business to be marginally EPS accretive and to boost revenue in two years.

The merged entity of PG’s beauty segment with Coty is focusing on a consumer-centric, category-focused organizational structure to strengthen the brand portfolio. This will drive profitable growth and shareholder value over time.

Coty makes up 0.9% of the First Trust US IPO Index ETF (FPX).[1. Updated as of April 23, 2016] In the next part of the series, we’ll discuss Coty’s fiscal 2Q16 gross and operating margins.

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