Why Coty Inc. Stock Jumped Thursday

MarketsMotley Fool

What happened

Shares of beauty products company Coty (NYSE: COTY) 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.

Continue Reading Below

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.

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.

10 stocks we like better than CotyWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Coty (Class A) wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of February 5, 2018

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Continue Reading Below