Few Indicators Flashing Warning Signs for Coty Inc. (COTY)

Let’s reassess the active stocks with an eye toward COTY stock. Just how should we respond to Thursday’s drubbing? Is the mighty fruit now destined to decay? Or is this a mere bruising and nothing more? On 07 February, shares of Coty Inc. (NYSE:COTY) closed lower after a volatile session. The shares dropped -0.38 points or -5.11 percent at $7.06 with a heavy trade volume of 14.123 million shares. After opening the session at $7.34, the shares went as high as $7.49 and as low as $7.06, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $5.08 billion and now has 719.22 million shares outstanding. Coty Inc. (COTY) stock has lost -6.12 percent of market value in 21 trading days.

COTY stock has a trailing 3-year beta of 0.68, offering the possibility of a lower rate of return, but also posing less risk. The portion of a company’s profit allocated to each outstanding share of common stock was -$0.16 a share in the trailing twelve months. The stock’s value has surged 7.62 percent year to date (YTD) against a decline of -59.5 percent in 12 month’s time. The company’s shares still trade -67.44 percent away from its 1-year high of $21.68 and 19.46 percent up from 52-week low of $5.91. The average consensus rating on the company is 2.6, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Coty Inc. (COTY) will probably climb 31.3 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $13 price as 12-month high target. This represents a whopping 84.14 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $8.75, which represents a return potential of 23.94 percent when compared to the closing price of the stock of $7.06 on Thursday, February 07. The lowest price target for the stock is $7 — slightly more than -0.85 percent from COTY’s current share price.

History has shown that shares in Coty Inc. have gone down on 12 different earnings reaction days and are predicted to add 0.08 percent when the company reports upcoming earnings. Analysts are forecasting revenue to suffer decline of -6.3 percent to $2.47B in the fiscal second quarter, while earnings are seen soaring by nearly -31.25 percent to $0.22 per share. It earned $0.11 per share, better than the $0.08, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $2.03B, worse than the $2.17B analysts expected. Earnings are estimated to increase by 74 percent this year, 15.38 percent next year and continue to increase by 7.88 percent annually for the next 5 years.

Let’s take a look at some insider activity at Coty Inc. (NYSE:COTY) and see the pattern. The earliest insider trade took place on 11/20/2018. Jab Cosmetics B.V. gathered a total of 2.8 million shares of company at average share price of $9.03. The total for the purchase was set at $25.28 million. After this transaction, the 10% Owner account balance stood at 301 million shares. The stock lost -21.82 percent since that insider purchase. On 11/16/2018, Jab Cosmetics B.V., 10% Owner, purchased 5.4 million shares at a price per share of $8.89. This added 48.01 million shares to the insider’s fortune and the stock saw a -20.58 percent retreat in value since the news became public. This transaction left 298 million shares in the 10% Owner account.

On 11/15/2018, Director Singer Robert S performed a purchase transaction worth $373.5 thousand. This purchase at $8.3 each has added 45 thousand shares into the insider’s portfolio position. Meanwhile, shares have recorded -14.94 percent decrease since the transaction was reported. The insider now is left with 225 thousand shares remaining in the account. Laubies Pierre, who performs the CEO job, bought 2.31 million shares for $20.06 million. The acquisition occurred on 11/14/2018 was priced at $8.69 per share. The share price plunged -18.76 percent since the reporting date. Laubies Pierre now left with a stake of 2.31 million COTY stock worth $16.3 million after the insider buying.

The stock is currently hovering around the first support level of $6.92. Below this, the next support is placed in the zone of $6.77. Till the time, the COTY stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 44.24 on daily chart, which may remain a cause for concern. If the price breaks below $6.77 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $7.35 mark may result into a pull-back move towards $7.63 level.

Further, it is sporting a 0.55 on the Price-to-Sales ratio. Compare this with the industry average P/S of 8.5. 61.9 percent is the gross profit margin for Coty Inc. and operating margin sits at 1.1 percent. Along with this, the net profit margin is -1.8 percent.