Coty Set to Release Q3 Earnings: Key Insights for Investors

Coty Inc. COTY is likely to register a decline in the top line when it reports third-quarter fiscal 2025 earnings on May 6. The Zacks Consensus Estimate for revenues is pegged at $1.3 billion, indicating a decrease of 5.8% from the prior-year reported figure. 

The consensus mark for earnings has moved down by a penny in the past seven days to 5 cents per share, which is in line with the year-ago quarter’s reported figure. COTY delivered a trailing four-quarter negative earnings surprise of 65.7%, on average. (Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.)

Coty Price, Consensus and EPS Surprise

Coty price-consensus-eps-surprise-chart | Coty Quote

Things to Know About COTY’s Upcoming Results

Coty has been facing significant challenges across several key areas of its business, including China, Travel Retail Asia, Australia and Consumer Beauty in the United States. On the last earnings call, management highlighted that it anticipates these pressures to persist into the upcoming quarter. We expect organic LFL revenues to decline 1.5% for the third quarter of fiscal 2025.

Currency headwinds are also likely to weigh on the results in the to-be-reported quarter. The company highlighted that it expects to see foreign exchange headwind of roughly 3% to 4% in the second half, which in turn is likely to have affected the third-quarter performance. 

In addition, Coty has been experiencing higher advertising and consumer promotions (A&CP) spending for a while now. In the second quarter of fiscal 2025, the A&CP percentage remained in the high 20s, showing a year-on-year rise. With A&CP costs expected to remain at these elevated levels, the continued increase of such expenses, if not carefully managed, might have further weighed on margins and profitability.

Nonetheless, Coty’s strategic priorities are likely to have provided meaningful support to the performance of the quarter to be reported. Key initiatives, such as expanding its prestige fragrance portfolio, strengthening digital and DTC capabilities, and executing cost-saving measures, are expected to have driven consumer engagement and support margin resilience.

Earnings Whispers for COTY Stock

Our proven model does not predict an earnings beat for Coty this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. 

Coty has a Zacks Rank #4 (Sell) and an Earnings ESP of -41.20%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Some Stocks With the Favorable Combination

Here are some companies worth considering, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.

The J. M. Smucker Company SJM currently has an Earnings ESP of +4.52% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for fourth-quarter fiscal 2025 earnings per share (EPS) is pegged at $2.25, which implies a 15.4% decrease year over year. The consensus estimate for J. M. Smucker’s quarterly revenues is pegged at $2.2 billion, which indicates a decline of 1% from the figure reported in the prior-year quarter. SJM delivered a trailing four-quarter earnings surprise of 11.7%, on average.

Ollie's Bargain Outlet Holdings, Inc. OLLI currently has an Earnings ESP of +1.64% and a Zacks Rank of 3. The Zacks Consensus Estimate for first-quarter fiscal 2025 EPS is pegged at 70 cents, which implies a 4.1% decrease year over year.

The consensus mark for Ollie's Bargain’s quarterly revenues is pegged at $564.2 million, which indicates growth of 10.9% from the figure reported in the prior-year quarter. OLLI delivered a trailing four-quarter earnings surprise of 3.3%, on average.

Post Holdings, Inc. POST currently has an Earnings ESP of +3.22% and a Zacks Rank of 3. The Zacks Consensus Estimate for second-quarter fiscal 2025 EPS is pegged at $1.18, which implies a 21.9% decrease year over year.

The consensus mark for Post Holdings’ quarterly revenues is pegged at $2 billion, which indicates a decline of 1.1% from the figure reported in the prior-year quarter. POST delivered a trailing four-quarter earnings surprise of 22.3%, on average.

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

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