Value
9.4/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 10.0 |
| EV/EBITDA | 7.9 |
| Fwd P/E | 9.9 |
| PEG | 10.0 |
| Analyst target | 9.0 |
- ▸Forward P/E: 5.5x
- ▸PEG: 0.04
- ▸Attractively valued
COTY · Why this verdict
Why Coty (COTY) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.0/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
At a forward P/E of 5.6x, Coty screens as deeply discounted, but four consecutive earnings misses, declining revenue, business quality below the minimum threshold, and a hard death-cross signal in place indicate the discount reflects genuine fundamental stress rather than a recoverable opportunity.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Despite a GAAP net loss, the business generates positive free cash flow with a 7% FCF margin and a 22.3% FCF yield — a disconnect between reported earnings and cash generation that provides a thin but real floor beneath the valuation. Quality breakdown | FCF margin holds above 5% over the next four reported quarters, confirming that the cash-generative profile is durable and not deteriorating alongside the GAAP losses. | →Stable |
| CounterA 7% FCF margin in a declining-revenue business offers minimal cushion; further top-line pressure combined with fixed-cost commitments in the prestige fragrance segment could tip free cash flow negative and remove the only credible valuation support. | ||
At a forward P/E of 5.6x and a PEG of 0.04, the stock is priced as if the business faces sustained operational deterioration — a level that could offer asymmetric recovery potential if execution stabilizes, but that currently reflects the market pricing in continued decline. Valuation breakdown | Revenue decline arrests and turns flat or positive year-over-year, and earnings surprises return to positive territory within four quarters, validating that the cheap multiple marks a bottom rather than a warning. | →Stable |
| CounterDeep value multiples in a business with a 60% revenue concentration in a single product category, four consecutive earnings misses averaging a roughly 296% negative surprise, and a confirmed technical breakdown often represent rational pricing rather than opportunity — the discount can persist or widen. | ||
The company has missed earnings estimates in each of the last three reported quarters, with the average negative surprise approaching 296% — a pattern that signals management's guidance credibility is seriously impaired and that consensus estimates remain anchored too high. Catalyst breakdown | If the operating picture stabilizes, EPS surprise turns positive above 0% for at least two of the next three reported quarters, signaling that the guidance reset has found a floor. | →Stable |
| CounterWith estimates severely reset after the miss streak, the bar for a positive surprise has been marked down substantially; a quarter of even modest operational improvement could clear a floor that has already absorbed the bulk of the downward revision. | ||
A confirmed death-cross signal is active alongside a price below the 200-day moving average with the slope declining at 11.4% over 30 days — a technical structure that blocks a timing-sound entry regardless of the valuation argument. Warnings | A credible recovery requires the stock to reclaim and hold above its 200-day moving average with the slope turning positive for at least four consecutive weeks before technical conditions support re-entry. | →Stable |
| CounterTechnical breakdowns are lagging indicators; if the next earnings report delivers even a modest positive surprise, price can recover faster than moving-average crossovers update, leaving a purely technical waiting stance poorly timed. | ||
Despite a GAAP net loss, the business generates positive free cash flow with a 7% FCF margin and a 22.3% FCF yield — a disconnect between reported earnings and cash generation that provides a thin but real floor beneath the valuation.
→StableQuality breakdown
- Expectation
- FCF margin holds above 5% over the next four reported quarters, confirming that the cash-generative profile is durable and not deteriorating alongside the GAAP losses.
CounterA 7% FCF margin in a declining-revenue business offers minimal cushion; further top-line pressure combined with fixed-cost commitments in the prestige fragrance segment could tip free cash flow negative and remove the only credible valuation support.
At a forward P/E of 5.6x and a PEG of 0.04, the stock is priced as if the business faces sustained operational deterioration — a level that could offer asymmetric recovery potential if execution stabilizes, but that currently reflects the market pricing in continued decline.
→StableValuation breakdown
- Expectation
- Revenue decline arrests and turns flat or positive year-over-year, and earnings surprises return to positive territory within four quarters, validating that the cheap multiple marks a bottom rather than a warning.
CounterDeep value multiples in a business with a 60% revenue concentration in a single product category, four consecutive earnings misses averaging a roughly 296% negative surprise, and a confirmed technical breakdown often represent rational pricing rather than opportunity — the discount can persist or widen.
The company has missed earnings estimates in each of the last three reported quarters, with the average negative surprise approaching 296% — a pattern that signals management's guidance credibility is seriously impaired and that consensus estimates remain anchored too high.
→StableCatalyst breakdown
- Expectation
- If the operating picture stabilizes, EPS surprise turns positive above 0% for at least two of the next three reported quarters, signaling that the guidance reset has found a floor.
CounterWith estimates severely reset after the miss streak, the bar for a positive surprise has been marked down substantially; a quarter of even modest operational improvement could clear a floor that has already absorbed the bulk of the downward revision.
A confirmed death-cross signal is active alongside a price below the 200-day moving average with the slope declining at 11.4% over 30 days — a technical structure that blocks a timing-sound entry regardless of the valuation argument.
→StableWarnings
- Expectation
- A credible recovery requires the stock to reclaim and hold above its 200-day moving average with the slope turning positive for at least four consecutive weeks before technical conditions support re-entry.
CounterTechnical breakdowns are lagging indicators; if the next earnings report delivers even a modest positive surprise, price can recover faster than moving-average crossovers update, leaving a purely technical waiting stance poorly timed.
Per-dimension breakdown
Quality
3.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 1.4 |
| Gross margin | 8.6 |
| Op margin | 0.0 |
| Net margin | 0.0 |
| Current ratio | 3.3 |
| FCF quality | 5.4 |
| Moat | 4.0 |
| Piotroski F | 5.6 |
- ▸FCF-positive despite GAAP loss (FCF margin 7%, FCF yield 23.5%)
- ▸No competitive moat
Growth
6.1/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 2.2 |
| EPS growth | 10.0 |
- ▸Declining revenue: -1%
Momentum
2.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 6.1 |
| OBV | 1.0 |
| MA position | 1.0 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope -11.6%/30d — confirmed downtrend
Sentiment
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 9.7 |
| erm sentiment | 3.8 |
- ▸Analyst upside: 60%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
3.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 9.2 |
| quality rank | 0.0 |
| growth rank | 0.0 |
Technical
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.0 |
| support resistance | 7.2 |
| 52w position | 0.0 |
| gap | 6.0 |
Risk (lower is worse)
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 4.3 |
| days to cover | 5.4 |
| volatility | 0.1 |
| put call | 1.1 |
| implied vol | 2.6 |
| max pain risk | 3.0 |
| beta | 7.0 |
| debt equity | 5.1 |
- ▸Elevated put/call: 1.83
- ▸High IV: 64%
- ▸Above max pain $0
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
2.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 3.5 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
- ▸Earnings concerns: 0B/3M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- ASYMMETRY:4.0>=1.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:56d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:2.5<4.5
- DEATH_CROSS:HARD_BLOCK
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
3.95
Upside
+39.1%
Downside
9.9%
Sizing output
AVOID
SetupRECOVERY — Death cross but MACD improving, RSI 58
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — MCap $1.7B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Value at 9.4 could not lift the engine output above the verdict floor. Failed gate signal: MOMENTUM:2.5<4.5.
The strongest dimensions are Value at 9.4, Sentiment at 6.2, and Growth at 6.1; the weakest are Catalyst at 2.1, Momentum at 2.5, and Quality at 3.1. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 3.95 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1At a forward P/E of 5.6x and a PEG of 0.04, the stock is priced as if the business faces sustained operational deterioration — a level that could offer asymmetric recovery potential if execution stabilizes, but that currently reflects the market pricing in continued decline.
Trip ifRevenue decline worsens beyond -5% year-over-year for 2 consecutive quarters, signaling that the current -1% rate is accelerating into structural deterioration.
- P2Despite a GAAP net loss, the business generates positive free cash flow with a 7% FCF margin and a 22.3% FCF yield — a disconnect between reported earnings and cash generation that provides a thin but real floor beneath the valuation.
Trip ifFree cash flow turns negative (FCF margin falls below 0%) for 2 consecutive reported quarters.
- P3The company has missed earnings estimates in each of the last three reported quarters, with the average negative surprise approaching 296% — a pattern that signals management's guidance credibility is seriously impaired and that consensus estimates remain anchored too high.
Trip ifEPS surprise exceeds 0% for 2 consecutive quarters, indicating the persistent miss streak has reversed.
- P4A confirmed death-cross signal is active alongside a price below the 200-day moving average with the slope declining at 11.4% over 30 days — a technical structure that blocks a timing-sound entry regardless of the valuation argument.
Trip ifPrice reclaims and holds above the 200-day moving average for 4 consecutive weeks with the moving-average slope turning positive.