Coty's Adjusted EBITDA Margin Up 60 Bps in FY25: Can It Hold in FY26?

Coty Inc. (COTY) ended fiscal 2025 with adjusted EBITDA of $1.08 billion and a margin of 18.4%, up 60 basis points year over year. The expansion reflects disciplined cost controls and productivity gains, but also some short-term savings that may not recur, leaving investors to question whether profitability can be sustained in fiscal 2026.

A central lever is Coty’s All-In To Win program. Between fiscal 2021 and 2025, the initiative delivered roughly $850 million in cumulative savings. Management now targets another $370 million over the next two years, with about $80 million in fixed cost reductions and $120 million in productivity savings expected in fiscal 2026. These measures are designed to create room for reinvestment while helping to offset inflationary and tariff-related headwinds.

Still, profitability will be tested in the near term. Management has guided to adjusted EBITDA declines in the first half of fiscal 2026, down a mid-to-high teens percentage in the fiscal first quarter and a low-to-mid teens percentage in the fiscal second quarter, reflecting weaker sales, negative impact from tariffs and the restoration of variable compensation. Management anticipates a turnaround in the second half, with EBITDA growth supported by a return to sales momentum, major product launches and stepped-up benefits from tariff mitigation efforts. The rebound is also expected to drive adjusted earnings per share growth.

Coty’s margin expansion in fiscal 2025 highlights progress in efficiency and cost management. However, with tariffs, variable compensation and softer first-half sales creating headwinds, fiscal 2026 will be an important test of whether these improvements can be sustained. Sales growth is expected to strengthen in the latter part of the year.

Coty’s Zacks Rank & Share Price Performance

Shares of this Zacks Rank #4 (Sell) company have lost 12.2% in the past month compared with the broader Consumer Staples sector’s 3.4% decline. COTY has also underperformed the industry and the S&P 500 index’s growth of 3.9% and 4.3%, respectively, during the same period.

COTY Stock's Past Month Performance

Is COTY a Value Play Stock?

Coty currently trades at a forward 12-month P/E ratio of 9.28, which is down from the industry average of 27.9 and below the sector average of 16.92. This valuation positions the stock at a modest discount relative to both its direct peers and the broader consumer staples sector.

COTY P/E Ratio (Forward 12 Months)

Stocks to Consider

Sally Beauty Holdings, Inc. (SBH) operates as a specialty retailer and distributor of professional beauty supplies. It currently sports a Zacks Rank of 1 (Strong Buy). SBH delivered a trailing four-quarter average earnings surprise of 8.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Sally Beauty’s current fiscal-year earnings indicates growth of 8.9%, from the year-ago actuals.

Celsius Holdings, Inc. (CELH) develops, processes, manufactures, markets, sells and distributes functional energy drinks. It sports a Zacks Rank #1 at present. CELH delivered a trailing four-quarter earnings surprise of 5.4%, on average.

The Zacks Consensus Estimate for Celsius Holdings’ current fiscal-year sales and earnings indicates growth of 77.7% and 54.3%, respectively, from the prior-year levels.

Laird Superfood, Inc. (LSF) manufactures and markets plant-based, natural and functional food in the United States. It currently carries a Zacks Rank # 2 (Buy). LSF delivered a trailing four-quarter earnings surprise of 11.3%, on average.

The Zacks Consensus Estimate for Laird Superfood’s current fiscal-year sales and earnings indicates growth of 21% and 23.8%, respectively, from the prior-year levels.

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This article originally published on Zacks Investment Research (zacks.com).

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