What Happened?
Shares of beauty products company Coty (NYSE: COTY) fell 12.6% in the afternoon session after the company reported fourth-quarter 2025 results that missed Wall Street's profit expectations.
While revenue of $1.68 billion was flat year-over-year and narrowly beat forecasts, the company's underlying performance showed signs of weakness. Adjusted earnings per share came in at $0.14, significantly missing the consensus estimate of $0.18. Furthermore, the company's organic revenue, which excludes currency fluctuations and acquisitions, fell 3% year-over-year. Profitability also worsened, with the gross margin declining by 3 percentage points and the operating margin falling by 7.2 percentage points compared to the same quarter last year. This combination of a significant earnings miss, declining organic sales, and shrinking margins concerned investors about the company's financial health.
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What Is The Market Telling Us
Coty’s shares are very volatile and have had 22 moves greater than 5% over the last year. But moves this big are rare even for Coty and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock dropped 19.4% on the news that the company reported a surprise loss for its second quarter as key profitability metrics declined.
The beauty products company posted an adjusted loss of $0.05 per share for its second quarter, missing Wall Street's expectation for a $0.02 profit. While revenue of $1.25 billion topped analyst estimates, it still represented an 8.1% decline year-over-year. Furthermore, the company's operating margin decreased to 1.2% from 2.5% in the same period last year, and it burned through $131.8 million in cash. Organic revenue, which removes the effects of currency fluctuations and acquisitions, also fell by 9% year-over-year. Looking ahead, analysts expect revenue to remain flat over the next 12 months, an underwhelming projection that suggests demand challenges may persist. Overall, the surprise loss and weakening profitability metrics overshadowed the revenue beat, disappointing investors.
Coty is down 14% since the beginning of the year, and at $2.68 per share, it is trading 60.9% below its 52-week high of $6.85 from February 2025. Investors who bought $1,000 worth of Coty’s shares 5 years ago would now be looking at an investment worth $336.90.
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