Intrinsic value of Coty Cl A - COTY

Previous Close

$13.95

  Intrinsic Value

$26.71

stock screener

  Rating & Target

str. buy

+91%

Previous close

$13.95

 
Intrinsic value

$26.71

 
Up/down potential

+91%

 
Rating

str. buy

We calculate the intrinsic value of COTY stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  75.90
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  7,650
  12,240
  18,911
  28,281
  41,034
  57,894
  79,590
  106,834
  140,279
  180,505
  227,993
  283,116
  346,136
  417,210
  496,398
  583,676
  678,955
  782,099
  892,942
  1,011,303
  1,137,005
  1,269,884
  1,409,800
  1,556,648
  1,710,361
  1,870,916
  2,038,333
  2,212,684
  2,394,085
  2,582,701
  2,778,743
Variable operating expenses, $m
 
  10,511
  15,314
  22,061
  31,244
  43,383
  59,005
  78,621
  102,703
  131,667
  165,859
  203,851
  249,227
  300,402
  357,420
  420,262
  488,865
  563,132
  642,942
  728,165
  818,673
  914,349
  1,015,093
  1,120,827
  1,231,505
  1,347,108
  1,467,653
  1,593,190
  1,723,804
  1,859,612
  2,000,767
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  8,088
  10,511
  15,314
  22,061
  31,244
  43,383
  59,005
  78,621
  102,703
  131,667
  165,859
  203,851
  249,227
  300,402
  357,420
  420,262
  488,865
  563,132
  642,942
  728,165
  818,673
  914,349
  1,015,093
  1,120,827
  1,231,505
  1,347,108
  1,467,653
  1,593,190
  1,723,804
  1,859,612
  2,000,767
Operating income, $m
  -438
  1,729
  3,596
  6,220
  9,790
  14,511
  20,585
  28,213
  37,576
  48,839
  62,134
  79,265
  96,909
  116,808
  138,978
  163,414
  190,090
  218,967
  250,000
  283,138
  318,332
  355,534
  394,707
  435,821
  478,856
  523,807
  570,680
  619,494
  670,281
  723,089
  777,975
EBITDA, $m
  117
  5,308
  8,201
  12,265
  17,796
  25,107
  34,516
  46,331
  60,836
  78,281
  98,875
  122,780
  150,110
  180,933
  215,275
  253,125
  294,445
  339,176
  387,246
  438,576
  493,089
  550,715
  611,393
  675,078
  741,739
  811,367
  883,972
  959,583
  1,038,252
  1,120,050
  1,205,068
Interest expense (income), $m
  190
  385
  815
  1,439
  2,315
  3,508
  5,084
  7,113
  9,660
  12,788
  16,549
  20,989
  26,143
  32,036
  38,682
  46,086
  54,247
  63,156
  72,801
  83,165
  94,232
  105,986
  118,411
  131,493
  145,224
  159,597
  174,610
  190,264
  206,567
  223,528
  241,165
Earnings before tax, $m
  -658
  1,343
  2,781
  4,781
  7,475
  11,003
  15,501
  21,100
  27,916
  36,051
  45,585
  58,276
  70,766
  84,772
  100,297
  117,328
  135,843
  155,811
  177,200
  199,974
  224,100
  249,548
  276,297
  304,327
  333,632
  364,210
  396,070
  429,230
  463,715
  499,560
  536,811
Tax expense, $m
  -259
  363
  751
  1,291
  2,018
  2,971
  4,185
  5,697
  7,537
  9,734
  12,308
  15,734
  19,107
  22,888
  27,080
  31,678
  36,678
  42,069
  47,844
  53,993
  60,507
  67,378
  74,600
  82,168
  90,081
  98,337
  106,939
  115,892
  125,203
  134,881
  144,939
Net income, $m
  -422
  981
  2,030
  3,490
  5,457
  8,032
  11,316
  15,403
  20,379
  26,317
  33,277
  42,541
  51,659
  61,883
  73,217
  85,649
  99,165
  113,742
  129,356
  145,981
  163,593
  182,170
  201,697
  222,159
  243,551
  265,873
  289,131
  313,338
  338,512
  364,679
  391,872

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  535
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  22,548
  36,106
  55,784
  83,425
  121,046
  170,778
  234,780
  315,144
  413,804
  532,465
  672,546
  835,150
  1,021,050
  1,230,709
  1,464,301
  1,721,758
  2,002,818
  2,307,078
  2,634,047
  2,983,196
  3,353,997
  3,745,970
  4,158,702
  4,591,883
  5,045,313
  5,518,925
  6,012,782
  6,527,091
  7,062,198
  7,618,587
  8,196,881
Adjusted assets (=assets-cash), $m
  22,013
  36,106
  55,784
  83,425
  121,046
  170,778
  234,780
  315,144
  413,804
  532,465
  672,546
  835,150
  1,021,050
  1,230,709
  1,464,301
  1,721,758
  2,002,818
  2,307,078
  2,634,047
  2,983,196
  3,353,997
  3,745,970
  4,158,702
  4,591,883
  5,045,313
  5,518,925
  6,012,782
  6,527,091
  7,062,198
  7,618,587
  8,196,881
Revenue / Adjusted assets
  0.348
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
  0.339
Average production assets, $m
  6,373
  18,813
  29,066
  43,468
  63,070
  88,983
  122,331
  164,203
  215,609
  277,437
  350,425
  435,149
  532,011
  641,252
  762,964
  897,110
  1,043,554
  1,202,087
  1,372,452
  1,554,373
  1,747,577
  1,951,811
  2,166,863
  2,392,568
  2,628,825
  2,875,597
  3,132,918
  3,400,895
  3,679,709
  3,969,611
  4,270,927
Working capital, $m
  -222
  -1,089
  -1,683
  -2,517
  -3,652
  -5,153
  -7,084
  -9,508
  -12,485
  -16,065
  -20,291
  -25,197
  -30,806
  -37,132
  -44,179
  -51,947
  -60,427
  -69,607
  -79,472
  -90,006
  -101,193
  -113,020
  -125,472
  -138,542
  -152,222
  -166,511
  -181,412
  -196,929
  -213,074
  -229,860
  -247,308
Total debt, $m
  7,137
  15,099
  26,649
  42,875
  64,958
  94,151
  131,720
  178,894
  236,807
  306,461
  388,689
  484,137
  593,261
  716,330
  853,449
  1,004,576
  1,169,558
  1,348,159
  1,540,090
  1,745,040
  1,962,701
  2,192,788
  2,435,062
  2,689,339
  2,955,503
  3,233,513
  3,523,407
  3,825,307
  4,139,414
  4,466,015
  4,805,473
Total liabilities, $m
  13,234
  21,194
  32,745
  48,971
  71,054
  100,247
  137,816
  184,989
  242,903
  312,557
  394,785
  490,233
  599,357
  722,426
  859,545
  1,010,672
  1,175,654
  1,354,255
  1,546,186
  1,751,136
  1,968,797
  2,198,884
  2,441,158
  2,695,435
  2,961,599
  3,239,609
  3,529,503
  3,831,403
  4,145,510
  4,472,110
  4,811,569
Total equity, $m
  9,315
  14,912
  23,039
  34,455
  49,992
  70,531
  96,964
  130,154
  170,901
  219,908
  277,762
  344,917
  421,694
  508,283
  604,756
  711,086
  827,164
  952,823
  1,087,862
  1,232,060
  1,385,201
  1,547,085
  1,717,544
  1,896,448
  2,083,714
  2,279,316
  2,483,279
  2,695,689
  2,916,688
  3,146,476
  3,385,312
Total liabilities and equity, $m
  22,549
  36,106
  55,784
  83,426
  121,046
  170,778
  234,780
  315,143
  413,804
  532,465
  672,547
  835,150
  1,021,051
  1,230,709
  1,464,301
  1,721,758
  2,002,818
  2,307,078
  2,634,048
  2,983,196
  3,353,998
  3,745,969
  4,158,702
  4,591,883
  5,045,313
  5,518,925
  6,012,782
  6,527,092
  7,062,198
  7,618,586
  8,196,881
Debt-to-equity ratio
  0.766
  1.010
  1.160
  1.240
  1.300
  1.330
  1.360
  1.370
  1.390
  1.390
  1.400
  1.400
  1.410
  1.410
  1.410
  1.410
  1.410
  1.410
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
  1.420
Adjusted equity ratio
  0.399
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413
  0.413

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -422
  981
  2,030
  3,490
  5,457
  8,032
  11,316
  15,403
  20,379
  26,317
  33,277
  42,541
  51,659
  61,883
  73,217
  85,649
  99,165
  113,742
  129,356
  145,981
  163,593
  182,170
  201,697
  222,159
  243,551
  265,873
  289,131
  313,338
  338,512
  364,679
  391,872
Depreciation, amort., depletion, $m
  555
  3,579
  4,605
  6,045
  8,005
  10,596
  13,931
  18,118
  23,259
  29,442
  36,741
  43,515
  53,201
  64,125
  76,296
  89,711
  104,355
  120,209
  137,245
  155,437
  174,758
  195,181
  216,686
  239,257
  262,883
  287,560
  313,292
  340,090
  367,971
  396,961
  427,093
Funds from operations, $m
  1,625
  4,560
  6,635
  9,535
  13,462
  18,628
  25,247
  33,521
  43,638
  55,759
  70,018
  86,056
  104,860
  126,009
  149,513
  175,360
  203,521
  233,951
  266,601
  301,418
  338,350
  377,351
  418,383
  461,416
  506,434
  553,433
  602,423
  653,427
  706,483
  761,640
  818,964
Change in working capital, $m
  867
  -409
  -594
  -834
  -1,135
  -1,500
  -1,931
  -2,425
  -2,977
  -3,580
  -4,226
  -4,906
  -5,609
  -6,326
  -7,048
  -7,768
  -8,480
  -9,180
  -9,865
  -10,534
  -11,187
  -11,826
  -12,453
  -13,069
  -13,680
  -14,289
  -14,900
  -15,517
  -16,145
  -16,787
  -17,448
Cash from operations, $m
  758
  4,969
  7,229
  10,369
  14,597
  20,129
  27,178
  35,946
  46,615
  59,339
  74,244
  90,962
  110,469
  132,334
  156,561
  183,128
  212,000
  243,131
  276,466
  311,952
  349,538
  389,178
  430,835
  474,485
  520,114
  567,723
  617,323
  668,944
  722,627
  778,427
  836,412
Maintenance CAPEX, $m
  0
  -1,176
  -1,881
  -2,907
  -4,347
  -6,307
  -8,898
  -12,233
  -16,420
  -21,561
  -27,744
  -35,043
  -43,515
  -53,201
  -64,125
  -76,296
  -89,711
  -104,355
  -120,209
  -137,245
  -155,437
  -174,758
  -195,181
  -216,686
  -239,257
  -262,883
  -287,560
  -313,292
  -340,090
  -367,971
  -396,961
New CAPEX, $m
  -432
  -7,056
  -10,253
  -14,402
  -19,602
  -25,913
  -33,348
  -41,873
  -51,406
  -61,828
  -72,988
  -84,723
  -96,862
  -109,241
  -121,711
  -134,146
  -146,444
  -158,533
  -170,365
  -181,921
  -193,204
  -204,234
  -215,051
  -225,706
  -236,257
  -246,772
  -257,321
  -267,977
  -278,813
  -289,903
  -301,316
Cash from investing activities, $m
  -1,164
  -8,232
  -12,134
  -17,309
  -23,949
  -32,220
  -42,246
  -54,106
  -67,826
  -83,389
  -100,732
  -119,766
  -140,377
  -162,442
  -185,836
  -210,442
  -236,155
  -262,888
  -290,574
  -319,166
  -348,641
  -378,992
  -410,232
  -442,392
  -475,514
  -509,655
  -544,881
  -581,269
  -618,903
  -657,874
  -698,277
Free cash flow, $m
  -406
  -3,263
  -4,906
  -6,940
  -9,352
  -12,091
  -15,068
  -18,160
  -21,212
  -24,049
  -26,488
  -28,804
  -29,908
  -30,108
  -29,276
  -27,314
  -24,155
  -19,757
  -14,108
  -7,214
  897
  10,186
  20,603
  32,093
  44,601
  58,068
  72,443
  87,675
  103,724
  120,554
  138,135
Issuance/(repayment) of debt, $m
  1,059
  7,961
  11,551
  16,225
  22,083
  29,193
  37,569
  47,173
  57,913
  69,654
  82,228
  95,448
  109,124
  123,070
  137,118
  151,127
  164,982
  178,601
  191,931
  204,950
  217,661
  230,088
  242,274
  254,277
  266,164
  278,010
  289,894
  301,899
  314,107
  326,600
  339,459
Issuance/(repurchase) of shares, $m
  -14
  4,616
  6,097
  7,926
  10,080
  12,507
  15,117
  17,787
  20,368
  22,690
  24,577
  24,614
  25,118
  24,706
  23,257
  20,680
  16,913
  11,917
  5,682
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  968
  12,577
  17,648
  24,151
  32,163
  41,700
  52,686
  64,960
  78,281
  92,344
  106,805
  120,062
  134,242
  147,776
  160,375
  171,807
  181,895
  190,518
  197,613
  204,950
  217,661
  230,088
  242,274
  254,277
  266,164
  278,010
  289,894
  301,899
  314,107
  326,600
  339,459
Total cash flow (excl. dividends), $m
  571
  9,314
  12,742
  17,211
  22,812
  29,609
  37,618
  46,801
  57,069
  68,295
  80,316
  91,258
  104,334
  117,667
  131,099
  144,493
  157,740
  170,761
  183,506
  197,736
  218,557
  240,273
  262,877
  286,370
  310,765
  336,078
  362,337
  389,575
  417,832
  447,154
  477,594
Retained Cash Flow (-), $m
  -8,955
  -5,597
  -8,127
  -11,416
  -15,537
  -20,539
  -26,433
  -33,190
  -40,747
  -49,007
  -57,854
  -67,155
  -76,777
  -86,589
  -96,473
  -106,330
  -116,078
  -125,659
  -135,038
  -144,198
  -153,141
  -161,885
  -170,459
  -178,904
  -187,267
  -195,601
  -203,963
  -212,410
  -220,999
  -229,789
  -238,836
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  23
  37
  57
  85
  123
  174
  239
  321
  421
  542
  684
  849
  1,038
  1,252
  1,489
  1,751
  2,037
  2,346
  2,679
  3,034
  3,411
  3,810
  4,229
  4,670
  5,131
  5,613
  6,115
  6,638
  7,182
  7,748
Cash available for distribution, $m
 
  3,718
  4,615
  5,795
  7,275
  9,070
  11,185
  13,611
  16,323
  19,287
  22,463
  24,103
  27,557
  31,078
  34,626
  38,163
  41,662
  45,101
  48,467
  53,538
  65,416
  78,389
  92,418
  107,467
  123,498
  140,476
  158,374
  177,165
  196,833
  217,365
  238,758
Discount rate, %
 
  7.20
  7.56
  7.94
  8.33
  8.75
  9.19
  9.65
  10.13
  10.64
  11.17
  11.73
  12.31
  12.93
  13.58
  14.26
  14.97
  15.72
  16.50
  17.33
  18.19
  19.10
  20.06
  21.06
  22.11
  23.22
  24.38
  25.60
  26.88
  28.22
  29.64
PV of cash for distribution, $m
 
  3,468
  3,989
  4,608
  5,281
  5,963
  6,600
  7,143
  7,542
  7,765
  7,791
  7,117
  6,839
  6,396
  5,826
  5,170
  4,472
  3,771
  3,100
  2,571
  2,311
  1,994
  1,656
  1,325
  1,021
  759
  545
  376
  251
  161
  99
Current shareholders' claim on cash, %
  100
  66.0
  46.3
  34.1
  26.2
  20.8
  17.0
  14.3
  12.3
  10.8
  9.7
  8.9
  8.2
  7.8
  7.4
  7.2
  7.0
  6.9
  6.8
  6.8
  6.8
  6.8
  6.8
  6.8
  6.8
  6.8
  6.8
  6.8
  6.8
  6.8
  6.8

Coty Inc. is a beauty company. The Company operates through four segments: Fragrances, Color Cosmetics, Skin & Body Care and Brazil Acquisition. Its fragrance products include a range of men's and women's products. Its fragrance brands include Calvin Klein, Marc Jacobs, Davidoff, Chloe, Balenciaga, Beyonce, Bottega Veneta, Miu Miu and Roberto Cavalli. Its color cosmetics products include lip, eye, nail and facial color products. The brands in its Color Cosmetics segment include Bourjois, Rimmel, Sally Hansen and OPI. Its skin & body care products include shower gels, deodorants, skin care and sun treatment products. Its skin & body care brands are adidas, Lancaster, philosophy and Playboy. The Company, through Hypermarcas S.A., engages in personal care and beauty business. The Brazil Acquisition segment includes product groupings, such as skin care, nail care, deodorants and hair care products. It operates in the Americas; Europe, the Middle East and Africa (EMEA), and Asia Pacific.

FINANCIAL RATIOS  of  Coty Cl A (COTY)

Valuation Ratios
P/E Ratio -24.7
Price to Sales 1.4
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 13.8
Price to Free Cash Flow 32
Growth Rates
Sales Growth Rate 75.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 188%
Cap. Spend. - 3 Yr. Gr. Rate 13.2%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 74.4%
Total Debt to Equity 76.6%
Interest Coverage -2
Management Effectiveness
Return On Assets -2.1%
Ret/ On Assets - 3 Yr. Avg. 2.3%
Return On Total Capital -4%
Ret/ On T. Cap. - 3 Yr. Avg. 2%
Return On Equity -8.7%
Return On Equity - 3 Yr. Avg. 13.5%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 60.6%
Gross Margin - 3 Yr. Avg. 60.2%
EBITDA Margin 1.1%
EBITDA Margin - 3 Yr. Avg. 7.9%
Operating Margin -5.7%
Oper. Margin - 3 Yr. Avg. 2.3%
Pre-Tax Margin -8.6%
Pre-Tax Margin - 3 Yr. Avg. -0%
Net Profit Margin -5.5%
Net Profit Margin - 3 Yr. Avg. 1.1%
Effective Tax Rate 39.4%
Eff/ Tax Rate - 3 Yr. Avg. -0.2%
Payout Ratio -88.4%

COTY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the COTY stock intrinsic value calculation we used $7650 million for the last fiscal year's total revenue generated by Coty Cl A. The default revenue input number comes from 2017 income statement of Coty Cl A. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our COTY stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.2%, whose default value for COTY is calculated based on our internal credit rating of Coty Cl A, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Coty Cl A.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of COTY stock the variable cost ratio is equal to 94.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for COTY stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Coty Cl A.

Corporate tax rate of 27% is the nominal tax rate for Coty Cl A. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the COTY stock is equal to 0.3%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for COTY are equal to 153.7%.

Life of production assets of 10 years is the average useful life of capital assets used in Coty Cl A operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for COTY is equal to -8.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $9315 million for Coty Cl A - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 643 million for Coty Cl A is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Coty Cl A at the current share price and the inputted number of shares is $9.0 billion.

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COMPANY NEWS

▶ Why Coty Inc. Stock Is Down 29% So Far This Year   [Jul-12-18 06:48PM  Motley Fool]
▶ RBC's top consumer staples picks   [Jun-26-18 02:17PM  CNBC Videos]
▶ CoverGirls Flagship Store to Open in NYC   [Jun-11-18 03:08PM  InvestorPlace]
▶ COVERGIRL to Open First-Ever Flagship Store   [10:00AM  Business Wire]
▶ Tariff losers: Whiskey, Motorcycles and Makeup   [Jun-01-18 01:02PM  Yahoo Finance Video]
▶ Coty: Fiscal 3Q Earnings Snapshot   [06:39AM  Associated Press]
▶ Coty Inc. Declares Quarterly Dividend   [06:30AM  Business Wire]
▶ Top 4 Cosmetics Stocks of 2018   [Apr-08-18 02:40PM  Investopedia]
▶ At $18.25, Is It Time To Buy Coty Inc (NYSE:COTY)?   [Mar-29-18 09:51AM  Simply Wall St.]
▶ After CoverGirl refresh, Coty turns to Clairol   [Mar-26-18 11:11AM  American City Business Journals]
▶ Does Coty Incs (NYSE:COTY) Debt Level Pose A Problem?   [Mar-21-18 06:14PM  Simply Wall St.]
▶ Coty Inc. to Offer Senior Unsecured Notes   [08:43AM  Business Wire]
▶ Former P&G executive hired as CEO of global paint firm   [Mar-15-18 11:55AM  American City Business Journals]
▶ NYSE trader: the U.S. housing market is weakening for two reasons   [Feb-28-18 03:38PM  Yahoo Finance Video]
▶ Coty Launches Digital Accelerator Start-Up Program   [Feb-21-18 09:00AM  Business Wire]
▶ 10 Makeup Companies That Still Test On Animals in 2017   [Feb-14-18 02:55PM  Insider Monkey]
▶ Bulls bet on Tenet Healthcare, this cosmetic maker   [Feb-12-18 01:54PM  CNBC Videos]
▶ Coty (COTY) Jumps: Stock Rises 14.2%   [Feb-09-18 08:57AM  Zacks]
▶ Hanesbrands and iRobot stumble while Twitter, Woodward gain   [Feb-08-18 04:28PM  Associated Press]
▶ Why Coty Inc. Stock Jumped Thursday   [01:24PM  Motley Fool]
▶ Coty beats Street 2Q forecasts   [06:45AM  Associated Press]
▶ Coty Inc. Declares Quarterly Dividend   [06:30AM  Business Wire]
▶ [$$] Aging Beauty Brands Want a Facelift   [Feb-05-18 11:57PM  The Wall Street Journal]
▶ [$$] Aging Beauty Brands Want a Facelift   [05:44AM  The Wall Street Journal]
▶ Avon Is Under Attack, Again   [02:12PM  TheStreet.com]
▶ Coty to Launch Lets Get Ready Skill for Amazon Echo Show   [Jan-17-18 11:08AM  Business Wire]
▶ After Major Overhaul, PG Stock Has Renewed Growth Potential   [Jan-02-18 07:17AM  InvestorPlace]
▶ ETFs with exposure to Coty, Inc. : December 29, 2017   [Dec-29-17 11:45AM  Capital Cube]
▶ ETFs with exposure to Coty, Inc. : December 18, 2017   [Dec-18-17 03:15PM  Capital Cube]
▶ Weekly Top Insider Buys Highlight for the Week of Dec. 15   [Dec-17-17 03:12PM  GuruFocus.com]
▶ ETFs with exposure to Coty, Inc. : December 7, 2017   [Dec-07-17 01:21PM  Capital Cube]
▶ [$$] Luxury Brands Win Right to Block Sale of Goods on Amazon in Europe   [Dec-06-17 11:58PM  The Wall Street Journal]
▶ ETFs with exposure to Coty, Inc. : November 27, 2017   [Nov-27-17 12:49PM  Capital Cube]
▶ Coty Inc (COTY): Dividend Is Coming In 3 Days, Should You Buy?   [Nov-25-17 03:15PM  Simply Wall St.]
▶ Why Procter & Gamble Co Stock Quietly Became a Buy   [Nov-14-17 10:46AM  InvestorPlace]
▶ Coty, Inc. Value Analysis (NYSE:COTY) : November 13, 2017   [Nov-13-17 01:57PM  Capital Cube]
Financial statements of COTY
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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