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Will Coty’s Stock Price Rise after Its Fiscal 3Q16 Results?

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Apr. 27 2016, Updated 11:06 a.m. ET

Coty’s stock rose after 2Q16 results

Coty (COTY) is set to announce its fiscal 3Q16 earnings before the market opens on May 3, 2016. Coty was trading at $29.80 on April 25, 2016. Its stock price has risen 45.9% since January 2, 2015, and 19.3% year-to-date.

The benchmark S&P 500 Index (SPY) (IVV) (VOO) has also risen 1.4% since 2015. Coty’s stock price rose 15.2% to $28.36 after its fiscal 2Q16 results were released.

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Stock price comparison

Coty’s stock has consistently seen upward movement since the beginning of 2015. However, the stock fell almost 18.9% to $26.51 on July 27, 2015, from $32.68 on July 1, 2015. The fall was primarily due to currency headwinds and the fall in global markets, particularly in the Asia-Pacific region. However, the stock was able to sustain some of its gains until November 2015.

Similarly, Estée Lauder’s stock price has risen 25.3% since January 2, 2015. L’Oréal’s (LRLCY) and Shiseido’s (SSDOY) stock prices have also risen 11.9% and 14.8%, respectively, year-to-date. However, Procter & Gamble’s (PG) and Avon’s (AVP) stock prices have fallen ~10% and 48.2%, respectively, since January 2, 2015.

Cash to shareholders

With strong cash flow generation, Coty completed its $700 million share buyback program in fiscal 2Q16. In fiscal 2016, the company has repurchased approximately 26 million Class A shares and has returned almost $90 million of cash to shareholders as dividends.

Additionally, Coty’s board has authorized an incremental $500 million share repurchase program. The company aims to be opportunistic in the way this authorization will be used. It will benefit Coty to return cash to its shareholders.

Strong financing activity

Coty recently closed on a $4.5 billion credit facility to refinance existing debt with new borrowings subject to longer maturities. Despite the volatile financial market, the company increased the size of its financing by $500 million, reflecting strong market demand.

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