4 Cosmetics Stocks to Watch as the Market Resets for 2026

Companies within the Zacks Cosmetics industry are operating in an increasingly challenging macroeconomic environment, marked by softer consumer spending, uneven retail restocking patterns and persistent cost pressures. Rising prices for packaging, ingredients, logistics and promotional activities are squeezing margins, while trade tensions and potential supply chain disruptions continue to add uncertainty to the operating landscape. These factors are reshaping demand trends and intensifying competition across the beauty market.

Even as near-term pressures persist, long-term industry fundamentals remain supported by innovation and digital transformation. Beauty companies are investing in product innovation, clean and science-backed formulations, and enhanced e-commerce capabilities to strengthen consumer engagement and support growth. Against this backdrop, The Estee Lauder Companies Inc. (EL), Coty Inc. (COTY), Helen of Troy Limited (HELE) and European Wax Center, Inc. (EWCZ) stand out as cosmetics stocks to watch as the market resets for 2026, given their focus on brand strength, digital initiatives and operational execution.

About the Industry

The Zacks Cosmetics industry includes companies that provide beauty and personal care products. Players in the industry manufacture, distribute, sell and market skincare, fragrance, makeup and hair care products. Many firms in the market sell products via sales representatives, whereas some do the same through retailers, independent and chain drug stores and pharmacies, upscale perfumeries, department stores and beauty salons. These companies also operate through retailer websites, third-party distributors and in-flight and duty-free shops. Some products offered by industry participants include moisturizers, serums, toners and cleansers under skincare; perfume sprays, candles and soaps under fragrance; lipsticks, mascaras, powders, eye shadows, foundation and nail polishes under makeup; and shampoos, conditioners and hair color products under hair care.

Trends Shaping the Future of the Cosmetics Industry

Challenging Economic Conditions: The cosmetics industry is navigating mounting challenges amid an increasingly uncertain economic environment. Ongoing trade tensions, softer consumer spending and uneven retail restocking cycles are reshaping the beauty market. As living costs rise and household savings come under pressure, consumers are prioritizing essential purchases and scaling back discretionary spending, including cosmetics. This shift in behavior is weighing on demand across many beauty brands. At the same time, operational costs are rising due to higher prices for packaging materials, ingredients, logistics and promotional activities. These cost pressures are squeezing profit margins and intensifying competition within the industry. Moreover, potential changes in trade policies or global supply chain disruptions could further elevate costs and influence product pricing, adding strain for cosmetic companies operating in a volatile and competitive landscape.

International Risk Factors: Cosmetic companies with global operations face international risk factors, including unfavorable foreign currency movements that can impact revenues and profitability. Geopolitical tensions and political instability may disrupt market access, reduce supply chain efficiency and affect operational continuity. In addition, trade conflicts, tariffs, sanctions and other regulatory restrictions may weigh on industry performance.

Innovation and Digitalization Driving Growth: Innovation and digitization remain key growth drivers in the beauty and skincare market. Consumers are increasingly seeking differentiated products that blend advanced technology with science-backed formulations, prompting cosmetic companies to continuously innovate and expand their offerings. Growing demand for organic and clean beauty products is further supporting market growth. Enhancing e-commerce capabilities is a major focus, with tools such as virtual try-ons, streamlined digital payments and data-driven online marketing gaining traction. In addition, many beauty brands are pursuing strategic acquisitions and partnerships to broaden product portfolios and remain competitive in this evolving industry.

Zacks Industry Rank Indicates Dull Prospects

The Zacks Cosmetics industry is housed within the broader Zacks Consumer Staples sector. The industry currently carries a Zacks Industry Rank #177, which places it in the bottom 27% of more than 243 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.

The industry’s position in the bottom 50% of the Zacks-ranked industries leads to a negative aggregate earnings outlook for the constituent companies. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group’s earnings growth potential. Since the beginning of October 2025, the industry’s consensus estimate for current financial year earnings has decreased 6.1%.

Before we present a few stocks that you may want to consider for your portfolio, let’s look at the industry’s recent stock market performance and valuation picture.

Industry vs. Broader Market

The Zacks Cosmetics industry has underperformed the S&P 500 composite but outperformed the broader Zacks Consumer Staples sector over the past year.

The industry has returned 10% over this period, underperforming the S&P 500’s growth of 18.3%. Meanwhile, the broader sector has appreciated 2.5%.

One-Year Price Performance

Industry's Current Valuation

Based on the forward 12-month price-to-earnings (P/E), which is commonly used to value consumer staples stocks, the industry is currently trading at 28.99X compared with the S&P 500’s 23.45X and the sector’s 16.42X.

In the past five years, the industry has traded as high as 41.34X and as low as 20.22X, with the median being 31.02X, as the chart below shows.

Price-to-Earnings Ratio (Past Five Years)

4 Cosmetic Stocks Worth Considering

The Estee Lauder Companies: This Zacks Rank #1 (Strong Buy) company manufactures and markets skincare, makeup, fragrance and hair care products. The Estee Lauder Companies is strategically focused on restoring profitability and driving long-term growth through its expanded Profit Recovery and Growth Plan. The transformative Beauty Reimagined vision aims to position the company as a leading consumer-centric prestige beauty brand by enhancing innovation, expanding in high-growth markets and digital channels and streamlining operations for agility. With a strong online business, increased AI integration and successful brand launches, The Estee Lauder Companies is well-positioned for growth. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for EL’s current fiscal year earnings per share (EPS) has moved up 0.5% in the past 30 days to $2.15. The stock has gained 39.7% in the past six months.

Price and Consensus: EL

Coty: A leading manufacturer, marketer and distributor of beauty products, Coty carries a Zacks Rank #3 (Hold) at present and is leveraging its brand equity, accelerating digital transformation and implementing cost-optimization initiatives to enhance overall performance. The company’s growth strategy focuses on stabilizing its Consumer Beauty segment, expanding its Prestige fragrance and makeup portfolio, building a stronger skincare presence, and enhancing its e-commerce and Direct-to-Consumer channels. Fragrances remain a key revenue driver, supported by resilient consumer demand and ongoing product innovation. In addition, Coty’s “All In to Win” cost-saving program continues to support margin expansion and operational efficiency.

The Zacks Consensus Estimate for COTY’s current fiscal year EPS has remained unchanged in the past 30 days at 42 cents. Coty’s shares have lost 34% in the past six months.

Price and Consensus: COTY

Helen of Troy: This Zacks Rank #3 company provides consumer products across the Beauty, Housewares, and Health & Home segments and is pursuing sustainable growth through a focused strategy centered on its high-performing Leadership Brands. These premium, higher-margin brands are supporting market share gains through strategic investments in innovation, marketing, and expanded distribution. The company’s long-term strategic plan, Elevate for Growth, focuses on strengthening brand building and enhancing operational scale. Helen of Troy is also advancing Project Pegasus, a global restructuring initiative designed to improve operating margins, streamline operations, and enable reinvestment in brand growth.

The Zacks Consensus Estimate for Helen of Troy’s current fiscal year EPS has moved down 1.2% in the past 30 days to $4.05. The stock has lost 26% in the past six months.

Price and Consensus: HELE

European Wax Center: The largest franchisor and operator of out-of-home waxing services in the United States, EWCZ holds a Zacks Rank #3 at present. Supported by a highly committed network of franchise partners, the company is positioned for long-term expansion. European Wax Center is focused on increasing guest acquisition, boosting average ticket through customer retention and reactivation, and enhancing overall operational productivity. By leveraging innovative marketing initiatives and advanced technology solutions, the brand aims to attract new clients while strengthening engagement with existing guests. These efforts support stronger customer relationships, improved brand loyalty and sustainable long-term growth.

The Zacks Consensus Estimate for European Wax’s current fiscal year EPS has moved down 4.7% in the past 30 days to 61 cents. EWCZ stock has plunged 33.6% in the past six months.

Price and Consensus: EWCZ

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

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