Intrinsic value of Coty Cl A - COTY

Previous Close

$17.05

  Intrinsic Value

$45.85

stock screener

  Rating & Target

str. buy

+169%

Previous close

$17.05

 
Intrinsic value

$45.85

 
Up/down potential

+169%

 
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

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 12.8

 

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
 
  11,017
  16,555
  24,333
  34,921
  48,916
  66,928
  89,544
  117,310
  150,703
  190,126
  235,030
  287,347
  346,350
  412,088
  484,543
  563,639
  649,265
  741,282
  839,540
  943,893
  1,054,203
  1,170,355
  1,292,262
  1,419,868
  1,553,153
  1,692,136
  1,836,875
  1,987,466
  2,144,047
  2,306,792
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
  11,017
  16,555
  24,333
  34,921
  48,916
  66,928
  89,544
  117,310
  150,703
  190,126
  235,030
  287,347
  346,350
  412,088
  484,543
  563,639
  649,265
  741,282
  839,540
  943,893
  1,054,203
  1,170,355
  1,292,262
  1,419,868
  1,553,153
  1,692,136
  1,836,875
  1,987,466
  2,144,047
  2,306,792
Operating income, $m
  -438
  1,223
  2,356
  3,948
  6,114
  8,977
  12,662
  17,289
  22,970
  29,802
  37,867
  48,085
  58,789
  70,860
  84,310
  99,133
  115,316
  132,834
  151,660
  171,763
  193,113
  215,681
  239,445
  264,386
  290,493
  317,762
  346,197
  375,809
  406,619
  438,654
  471,950
EBITDA, $m
  117
  2,560
  3,955
  5,915
  8,582
  12,108
  16,645
  22,343
  29,337
  37,750
  47,681
  59,210
  72,389
  87,254
  103,814
  122,067
  141,994
  163,565
  186,746
  211,500
  237,788
  265,578
  294,839
  325,551
  357,697
  391,275
  426,288
  462,751
  500,688
  540,135
  581,134
Interest expense (income), $m
  190
  242
  515
  913
  1,471
  2,230
  3,234
  4,525
  6,148
  8,139
  10,534
  13,361
  16,643
  20,396
  24,627
  29,342
  34,539
  40,212
  46,353
  52,953
  60,000
  67,484
  75,396
  83,726
  92,470
  101,622
  111,181
  121,149
  131,530
  142,331
  153,561
Earnings before tax, $m
  -658
  981
  1,841
  3,035
  4,643
  6,747
  9,429
  12,764
  16,822
  21,663
  27,333
  34,724
  42,145
  50,465
  59,682
  69,791
  80,777
  92,622
  105,307
  118,810
  133,113
  148,197
  164,049
  180,660
  198,023
  216,140
  235,016
  254,660
  275,089
  296,323
  318,389
Tax expense, $m
  -259
  265
  497
  819
  1,254
  1,822
  2,546
  3,446
  4,542
  5,849
  7,380
  9,375
  11,379
  13,625
  16,114
  18,844
  21,810
  25,008
  28,433
  32,079
  35,940
  40,013
  44,293
  48,778
  53,466
  58,358
  63,454
  68,758
  74,274
  80,007
  85,965
Net income, $m
  -422
  716
  1,344
  2,216
  3,390
  4,926
  6,883
  9,318
  12,280
  15,814
  19,953
  25,348
  30,766
  36,839
  43,568
  50,947
  58,967
  67,614
  76,874
  86,732
  97,172
  108,184
  119,756
  131,881
  144,557
  157,782
  171,561
  185,902
  200,815
  216,316
  232,424

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
  35,172
  54,341
  81,268
  117,915
  166,361
  228,708
  306,993
  403,102
  518,694
  655,153
  813,551
  994,644
  1,198,880
  1,426,431
  1,677,229
  1,951,021
  2,247,412
  2,565,925
  2,906,044
  3,267,256
  3,649,091
  4,051,150
  4,473,127
  4,914,831
  5,376,194
  5,857,279
  6,358,287
  6,879,555
  7,421,554
  7,984,893
Adjusted assets (=assets-cash), $m
  22,013
  35,172
  54,341
  81,268
  117,915
  166,361
  228,708
  306,993
  403,102
  518,694
  655,153
  813,551
  994,644
  1,198,880
  1,426,431
  1,677,229
  1,951,021
  2,247,412
  2,565,925
  2,906,044
  3,267,256
  3,649,091
  4,051,150
  4,473,127
  4,914,831
  5,376,194
  5,857,279
  6,358,287
  6,879,555
  7,421,554
  7,984,893
Revenue / Adjusted assets
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
Average production assets, $m
  6,373
  10,196
  15,753
  23,558
  34,182
  48,225
  66,299
  88,992
  116,853
  150,361
  189,918
  235,835
  288,331
  347,536
  413,500
  486,202
  565,570
  651,489
  743,821
  842,416
  947,125
  1,057,813
  1,174,363
  1,296,688
  1,424,731
  1,558,473
  1,697,932
  1,843,166
  1,994,273
  2,151,390
  2,314,693
Working capital, $m
  -222
  -881
  -1,362
  -2,036
  -2,954
  -4,168
  -5,731
  -7,692
  -10,100
  -12,996
  -16,416
  -20,384
  -24,922
  -30,039
  -35,741
  -42,025
  -48,885
  -56,311
  -64,292
  -72,814
  -81,864
  -91,432
  -101,506
  -112,079
  -123,146
  -134,706
  -146,760
  -159,313
  -172,374
  -185,954
  -200,069
Total debt, $m
  7,137
  14,726
  26,074
  42,014
  63,710
  92,390
  129,299
  175,644
  232,540
  300,971
  381,754
  475,526
  582,733
  703,641
  838,351
  986,824
  1,148,908
  1,324,372
  1,512,932
  1,714,282
  1,928,120
  2,154,166
  2,392,185
  2,641,995
  2,903,484
  3,176,611
  3,461,413
  3,758,010
  4,066,600
  4,387,464
  4,720,961
Total liabilities, $m
  13,234
  20,822
  32,170
  48,110
  69,806
  98,486
  135,395
  181,740
  238,636
  307,067
  387,850
  481,622
  588,829
  709,737
  844,447
  992,920
  1,155,004
  1,330,468
  1,519,028
  1,720,378
  1,934,216
  2,160,262
  2,398,281
  2,648,091
  2,909,580
  3,182,707
  3,467,509
  3,764,106
  4,072,696
  4,393,560
  4,727,057
Total equity, $m
  9,315
  14,350
  22,171
  33,157
  48,109
  67,875
  93,313
  125,253
  164,465
  211,627
  267,302
  331,929
  405,815
  489,143
  581,984
  684,310
  796,016
  916,944
  1,046,898
  1,185,666
  1,333,041
  1,488,829
  1,652,869
  1,825,036
  2,005,251
  2,193,487
  2,389,770
  2,594,181
  2,806,858
  3,027,994
  3,257,836
Total liabilities and equity, $m
  22,549
  35,172
  54,341
  81,267
  117,915
  166,361
  228,708
  306,993
  403,101
  518,694
  655,152
  813,551
  994,644
  1,198,880
  1,426,431
  1,677,230
  1,951,020
  2,247,412
  2,565,926
  2,906,044
  3,267,257
  3,649,091
  4,051,150
  4,473,127
  4,914,831
  5,376,194
  5,857,279
  6,358,287
  6,879,554
  7,421,554
  7,984,893
Debt-to-equity ratio
  0.766
  1.030
  1.180
  1.270
  1.320
  1.360
  1.390
  1.400
  1.410
  1.420
  1.430
  1.430
  1.440
  1.440
  1.440
  1.440
  1.440
  1.440
  1.450
  1.450
  1.450
  1.450
  1.450
  1.450
  1.450
  1.450
  1.450
  1.450
  1.450
  1.450
  1.450
Adjusted equity ratio
  0.399
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408
  0.408

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -422
  716
  1,344
  2,216
  3,390
  4,926
  6,883
  9,318
  12,280
  15,814
  19,953
  25,348
  30,766
  36,839
  43,568
  50,947
  58,967
  67,614
  76,874
  86,732
  97,172
  108,184
  119,756
  131,881
  144,557
  157,782
  171,561
  185,902
  200,815
  216,316
  232,424
Depreciation, amort., depletion, $m
  555
  1,337
  1,599
  1,967
  2,468
  3,130
  3,983
  5,053
  6,368
  7,948
  9,814
  11,124
  13,601
  16,393
  19,505
  22,934
  26,678
  30,731
  35,086
  39,737
  44,676
  49,897
  55,395
  61,165
  67,204
  73,513
  80,091
  86,942
  94,069
  101,481
  109,184
Funds from operations, $m
  1,625
  2,053
  2,942
  4,182
  5,858
  8,056
  10,866
  14,371
  18,648
  23,762
  29,767
  36,473
  44,367
  53,232
  63,073
  73,882
  85,645
  98,345
  111,960
  126,468
  141,848
  158,081
  175,150
  193,046
  211,761
  231,295
  251,652
  272,843
  294,884
  317,796
  341,608
Change in working capital, $m
  867
  -330
  -480
  -675
  -918
  -1,214
  -1,562
  -1,962
  -2,408
  -2,896
  -3,419
  -3,969
  -4,537
  -5,117
  -5,702
  -6,284
  -6,860
  -7,426
  -7,981
  -8,522
  -9,051
  -9,567
  -10,074
  -10,573
  -11,067
  -11,560
  -12,054
  -12,553
  -13,061
  -13,580
  -14,115
Cash from operations, $m
  758
  2,383
  3,423
  4,857
  6,776
  9,270
  12,428
  16,333
  21,056
  26,658
  33,187
  40,442
  48,904
  58,350
  68,774
  80,166
  92,505
  105,771
  119,941
  134,990
  150,898
  167,648
  185,224
  203,619
  222,829
  242,855
  263,707
  285,397
  307,945
  331,377
  355,723
Maintenance CAPEX, $m
  0
  -301
  -481
  -743
  -1,111
  -1,612
  -2,275
  -3,127
  -4,198
  -5,512
  -7,093
  -8,958
  -11,124
  -13,601
  -16,393
  -19,505
  -22,934
  -26,678
  -30,731
  -35,086
  -39,737
  -44,676
  -49,897
  -55,395
  -61,165
  -67,204
  -73,513
  -80,091
  -86,942
  -94,069
  -101,481
New CAPEX, $m
  -432
  -3,823
  -5,557
  -7,805
  -10,624
  -14,044
  -18,073
  -22,694
  -27,860
  -33,508
  -39,557
  -45,917
  -52,496
  -59,205
  -65,963
  -72,702
  -79,368
  -85,919
  -92,332
  -98,595
  -104,710
  -110,688
  -116,550
  -122,325
  -128,043
  -133,742
  -139,459
  -145,234
  -151,107
  -157,117
  -163,303
Cash from investing activities, $m
  -1,164
  -4,124
  -6,038
  -8,548
  -11,735
  -15,656
  -20,348
  -25,821
  -32,058
  -39,020
  -46,650
  -54,875
  -63,620
  -72,806
  -82,356
  -92,207
  -102,302
  -112,597
  -123,063
  -133,681
  -144,447
  -155,364
  -166,447
  -177,720
  -189,208
  -200,946
  -212,972
  -225,325
  -238,049
  -251,186
  -264,784
Free cash flow, $m
  -406
  -1,741
  -2,615
  -3,691
  -4,959
  -6,386
  -7,920
  -9,488
  -11,002
  -12,362
  -13,463
  -14,434
  -14,716
  -14,456
  -13,582
  -12,042
  -9,797
  -6,826
  -3,122
  1,309
  6,452
  12,284
  18,777
  25,900
  33,621
  41,909
  50,735
  60,071
  69,896
  80,190
  90,939
Issuance/(repayment) of debt, $m
  1,059
  7,798
  11,348
  15,940
  21,695
  28,680
  36,909
  46,345
  56,896
  68,431
  80,784
  93,772
  107,207
  120,908
  134,710
  148,473
  162,084
  175,464
  188,560
  201,350
  213,838
  226,046
  238,019
  249,811
  261,489
  273,127
  284,803
  296,597
  308,590
  320,864
  333,496
Issuance/(repurchase) of shares, $m
  -14
  4,645
  6,477
  8,770
  11,563
  14,840
  18,555
  22,623
  26,932
  31,348
  35,722
  39,278
  43,120
  46,489
  49,273
  51,378
  52,740
  53,313
  53,079
  52,037
  50,202
  47,605
  44,284
  40,285
  35,658
  30,454
  24,722
  18,510
  11,862
  4,820
  0
Cash from financing (excl. dividends), $m  
  968
  12,443
  17,825
  24,710
  33,258
  43,520
  55,464
  68,968
  83,828
  99,779
  116,506
  133,050
  150,327
  167,397
  183,983
  199,851
  214,824
  228,777
  241,639
  253,387
  264,040
  273,651
  282,303
  290,096
  297,147
  303,581
  309,525
  315,107
  320,452
  325,684
  333,496
Total cash flow (excl. dividends), $m
  571
  10,703
  15,210
  21,019
  28,299
  37,134
  47,544
  59,479
  72,826
  87,416
  103,042
  118,616
  135,611
  152,942
  170,400
  187,809
  205,027
  221,951
  238,517
  254,696
  270,492
  285,935
  301,080
  315,996
  330,768
  345,490
  360,259
  375,178
  390,349
  405,874
  424,436
Retained Cash Flow (-), $m
  -8,955
  -5,361
  -7,821
  -10,986
  -14,952
  -19,766
  -25,438
  -31,940
  -39,212
  -47,162
  -55,675
  -64,627
  -73,886
  -83,328
  -92,841
  -102,326
  -111,707
  -120,928
  -129,953
  -138,768
  -147,375
  -155,789
  -164,040
  -172,167
  -180,215
  -188,236
  -196,283
  -204,411
  -212,677
  -221,136
  -229,842
Prev. year cash balance distribution, $m
 
  326
  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
 
  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 available for distribution, $m
 
  5,668
  7,389
  10,033
  13,347
  17,368
  22,106
  27,539
  33,614
  40,255
  47,367
  53,989
  61,725
  69,613
  77,560
  85,484
  93,321
  101,024
  108,564
  115,928
  123,118
  130,147
  137,040
  143,829
  150,553
  157,254
  163,976
  170,766
  177,672
  184,738
  194,594
Discount rate, %
 
  8.90
  9.35
  9.81
  10.30
  10.82
  11.36
  11.93
  12.52
  13.15
  13.81
  14.50
  15.22
  15.98
  16.78
  17.62
  18.50
  19.43
  20.40
  21.42
  22.49
  23.61
  24.80
  26.03
  27.34
  28.70
  30.14
  31.65
  33.23
  34.89
  36.63
PV of cash for distribution, $m
 
  5,204
  6,180
  7,577
  9,016
  10,392
  11,592
  12,514
  13,079
  13,242
  12,995
  12,178
  11,273
  10,129
  8,838
  7,492
  6,171
  4,939
  3,841
  2,902
  2,130
  1,517
  1,048
  702
  456
  286
  174
  102
  58
  31
  17
Current shareholders' claim on cash, %
  100
  72.6
  54.6
  42.4
  33.8
  27.6
  23.0
  19.5
  16.9
  14.8
  13.2
  11.9
  10.9
  10.1
  9.4
  8.8
  8.3
  7.9
  7.6
  7.4
  7.1
  7.0
  6.8
  6.7
  6.6
  6.5
  6.5
  6.4
  6.4
  6.4
  6.4

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 -30.2
Price to Sales 1.7
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 16.8
Price to Free Cash Flow 39.1
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 8.9%, 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 3.5% 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%.

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 83.3%.

Life of production assets of 21.2 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 -7.2%. 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 748.896 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 $12.8 billion.

RELATED COMPANIES Price Int.Val. Rating
AVP Avon Products 1.94 0.34  str.sell
EL Estee Lauder C 124.69 83.95  sell
REV Revlon Cl A 21.50 53.98  str.buy
UN Unilever ADR 56.22 33.73  sell
IPAR Inter Parfums 42.30 34.51  hold
UL Unilever ADR 55.00 33.38  sell

COMPANY NEWS

▶ 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]
▶ Top 4 Cosmetics Stocks of 2017   [10:59AM  Investopedia]
▶ EBay and Stericycle slide while Macy's and Fox jump   [Nov-09-17 04:30PM  Associated Press]
▶ Why Coty Inc. Stock Jumped 21% Thursday   [12:21PM  Motley Fool]
▶ Coty Inc Stock Soars on Q1 Earnings Beat   [09:56AM  InvestorPlace]
▶ Coty reports 1Q loss   [06:43AM  Associated Press]
▶ Coty Inc. Declares Quarterly Dividend   [06:30AM  Business Wire]
▶ Wall Street in Red Over North Korea Concerns   [Sep-22-17 12:50PM  GuruFocus.com]
▶ Weekly Top Insider Buys Highlights   [Sep-08-17 10:47PM  GuruFocus.com]
▶ Why Coty Inc. Stock Dove 19% in August   [Sep-07-17 07:08PM  Motley Fool]
▶ ETFs with exposure to Coty, Inc. : August 31, 2017   [Aug-31-17 05:50PM  Capital Cube]
▶ Turnaround, Meet Headwinds: Coty Shares Downgraded   [Aug-30-17 03:32PM  Benzinga]
▶ 2 Stocks Fall on Earnings Report   [Aug-29-17 03:26PM  GuruFocus.com]
▶ Company News For August 23, 2017   [10:25AM  Zacks]
▶ Coty reports 4Q loss   [Aug-22-17 10:06PM  Associated Press]
▶ Coty plunges after big earnings miss   [06:08PM  Investing.com]
▶ [$$] Coty's Beauty Sales Slump   [02:48PM  The Wall Street Journal]
▶ 3 Bear Stocks for Today   [01:46PM  GuruFocus.com]
▶ Coty's Beauty Is on the Inside   [10:39AM  Bloomberg]
▶ Coty shares fall after earnings miss   [07:20AM  MarketWatch]
▶ Here's how Avon Products can get back on track   [Aug-04-17 01:25PM  American City Business Journals]
▶ How Avons CEO Failed to Fix the Company   [Aug-03-17 02:41PM  Fortune]
▶ Avon: More Downside Ahead?   [12:30PM  Barrons.com]
▶ Why Is Avon Getting Crushed?   [09:44AM  Barrons.com]
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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