Intrinsic value of Coty Cl A - COTY

Previous Close

$19.67

  Intrinsic Value

$100.68

stock screener

  Rating & Target

str. buy

+412%

  Value-price divergence*

+5000%

Previous close

$19.67

 
Intrinsic value

$100.68

 
Up/down potential

+412%

 
Rating

str. buy

 
Value-price divergence*

+5000%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

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 2016), $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 14.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  99.18
  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
  8,754
  14,006
  21,640
  32,362
  46,956
  66,249
  91,076
  122,251
  160,524
  206,555
  260,896
  323,973
  396,088
  477,420
  568,035
  667,908
  776,938
  894,967
  1,021,806
  1,157,248
  1,301,091
  1,453,145
  1,613,254
  1,781,294
  1,957,190
  2,140,914
  2,332,493
  2,532,005
  2,739,584
  2,955,420
  3,179,753
Variable operating expenses, $m
 
  12,893
  19,799
  29,500
  42,704
  60,158
  82,620
  110,824
  145,450
  187,096
  236,259
  293,105
  358,349
  431,931
  513,913
  604,270
  702,911
  809,695
  924,448
  1,046,986
  1,177,123
  1,314,690
  1,459,543
  1,611,572
  1,770,709
  1,936,928
  2,110,253
  2,290,756
  2,478,557
  2,673,828
  2,876,787
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
  8,307
  12,893
  19,799
  29,500
  42,704
  60,158
  82,620
  110,824
  145,450
  187,096
  236,259
  293,105
  358,349
  431,931
  513,913
  604,270
  702,911
  809,695
  924,448
  1,046,986
  1,177,123
  1,314,690
  1,459,543
  1,611,572
  1,770,709
  1,936,928
  2,110,253
  2,290,756
  2,478,557
  2,673,828
  2,876,787
Operating income, $m
  447
  1,113
  1,841
  2,862
  4,253
  6,091
  8,456
  11,427
  15,073
  19,459
  24,637
  30,868
  37,739
  45,488
  54,122
  63,638
  74,027
  85,272
  97,358
  110,262
  123,968
  138,456
  153,711
  169,721
  186,481
  203,986
  222,240
  241,249
  261,027
  281,592
  302,966
EBITDA, $m
  679
  1,548
  2,392
  3,577
  5,189
  7,321
  10,065
  13,511
  17,740
  22,828
  28,833
  35,804
  43,774
  52,762
  62,777
  73,814
  85,864
  98,908
  112,925
  127,894
  143,791
  160,595
  178,289
  196,861
  216,300
  236,604
  257,777
  279,826
  302,766
  326,620
  351,412
Interest expense (income), $m
  90
  143
  264
  458
  729
  1,099
  1,587
  2,216
  3,005
  3,974
  5,140
  6,516
  8,113
  9,939
  11,999
  14,293
  16,822
  19,583
  22,572
  25,783
  29,213
  32,855
  36,706
  40,760
  45,015
  49,469
  54,121
  58,972
  64,024
  69,280
  74,746
Earnings before tax, $m
  278
  970
  1,576
  2,404
  3,523
  4,992
  6,869
  9,211
  12,068
  15,485
  19,497
  24,352
  29,626
  35,549
  42,124
  49,345
  57,204
  65,689
  74,786
  84,479
  94,755
  105,600
  117,005
  128,962
  141,466
  154,517
  168,119
  182,277
  197,003
  212,312
  228,221
Tax expense, $m
  41
  262
  426
  649
  951
  1,348
  1,855
  2,487
  3,258
  4,181
  5,264
  6,575
  7,999
  9,598
  11,373
  13,323
  15,445
  17,736
  20,192
  22,809
  25,584
  28,512
  31,591
  34,820
  38,196
  41,720
  45,392
  49,215
  53,191
  57,324
  61,620
Net income, $m
  215
  708
  1,151
  1,755
  2,572
  3,644
  5,014
  6,724
  8,810
  11,304
  14,233
  17,777
  21,627
  25,951
  30,750
  36,022
  41,759
  47,953
  54,594
  61,670
  69,171
  77,088
  85,414
  94,142
  103,270
  112,798
  122,727
  133,062
  143,812
  154,988
  166,601

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  372
  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
  7,036
  11,259
  17,395
  26,015
  37,746
  53,254
  73,213
  98,273
  129,038
  166,041
  209,723
  260,429
  318,399
  383,778
  456,620
  536,904
  624,548
  719,427
  821,387
  930,264
  1,045,893
  1,168,123
  1,296,828
  1,431,908
  1,573,304
  1,720,992
  1,874,994
  2,035,374
  2,202,238
  2,375,740
  2,556,072
Adjusted assets (=assets-cash), $m
  6,664
  11,259
  17,395
  26,015
  37,746
  53,254
  73,213
  98,273
  129,038
  166,041
  209,723
  260,429
  318,399
  383,778
  456,620
  536,904
  624,548
  719,427
  821,387
  930,264
  1,045,893
  1,168,123
  1,296,828
  1,431,908
  1,573,304
  1,720,992
  1,874,994
  2,035,374
  2,202,238
  2,375,740
  2,556,072
Revenue / Adjusted assets
  1.314
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
  1.244
Average production assets, $m
  2,552
  4,076
  6,297
  9,417
  13,664
  19,278
  26,503
  35,575
  46,712
  60,107
  75,921
  94,276
  115,262
  138,929
  165,298
  194,361
  226,089
  260,435
  297,345
  336,759
  378,617
  422,865
  469,457
  518,357
  569,542
  623,006
  678,755
  736,813
  797,219
  860,027
  925,308
Working capital, $m
  83
  -210
  -325
  -485
  -704
  -994
  -1,366
  -1,834
  -2,408
  -3,098
  -3,913
  -4,860
  -5,941
  -7,161
  -8,521
  -10,019
  -11,654
  -13,425
  -15,327
  -17,359
  -19,516
  -21,797
  -24,199
  -26,719
  -29,358
  -32,114
  -34,987
  -37,980
  -41,094
  -44,331
  -47,696
Total debt, $m
  4,098
  7,555
  13,078
  20,835
  31,394
  45,351
  63,313
  85,867
  113,556
  146,859
  186,173
  231,808
  283,981
  342,822
  408,380
  480,635
  559,515
  644,906
  736,671
  834,660
  938,725
  1,048,733
  1,164,567
  1,286,139
  1,413,395
  1,546,315
  1,684,917
  1,829,258
  1,979,436
  2,135,588
  2,297,887
Total liabilities, $m
  6,675
  10,133
  15,656
  23,413
  33,972
  47,929
  65,891
  88,445
  116,134
  149,437
  188,751
  234,386
  286,559
  345,400
  410,958
  483,213
  562,093
  647,484
  739,249
  837,238
  941,303
  1,051,311
  1,167,145
  1,288,717
  1,415,973
  1,548,893
  1,687,495
  1,831,836
  1,982,014
  2,138,166
  2,300,465
Total equity, $m
  360
  1,126
  1,740
  2,601
  3,775
  5,325
  7,321
  9,827
  12,904
  16,604
  20,972
  26,043
  31,840
  38,378
  45,662
  53,690
  62,455
  71,943
  82,139
  93,026
  104,589
  116,812
  129,683
  143,191
  157,330
  172,099
  187,499
  203,537
  220,224
  237,574
  255,607
Total liabilities and equity, $m
  7,035
  11,259
  17,396
  26,014
  37,747
  53,254
  73,212
  98,272
  129,038
  166,041
  209,723
  260,429
  318,399
  383,778
  456,620
  536,903
  624,548
  719,427
  821,388
  930,264
  1,045,892
  1,168,123
  1,296,828
  1,431,908
  1,573,303
  1,720,992
  1,874,994
  2,035,373
  2,202,238
  2,375,740
  2,556,072
Debt-to-equity ratio
  11.383
  6.710
  7.520
  8.010
  8.320
  8.520
  8.650
  8.740
  8.800
  8.840
  8.880
  8.900
  8.920
  8.930
  8.940
  8.950
  8.960
  8.960
  8.970
  8.970
  8.980
  8.980
  8.980
  8.980
  8.980
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
Adjusted equity ratio
  0.001
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  215
  708
  1,151
  1,755
  2,572
  3,644
  5,014
  6,724
  8,810
  11,304
  14,233
  17,777
  21,627
  25,951
  30,750
  36,022
  41,759
  47,953
  54,594
  61,670
  69,171
  77,088
  85,414
  94,142
  103,270
  112,798
  122,727
  133,062
  143,812
  154,988
  166,601
Depreciation, amort., depletion, $m
  232
  435
  551
  714
  937
  1,231
  1,609
  2,084
  2,667
  3,368
  4,196
  4,936
  6,035
  7,274
  8,654
  10,176
  11,837
  13,635
  15,568
  17,631
  19,823
  22,140
  24,579
  27,139
  29,819
  32,618
  35,537
  38,577
  41,739
  45,028
  48,445
Funds from operations, $m
  681
  1,143
  1,702
  2,470
  3,509
  4,875
  6,623
  8,808
  11,477
  14,672
  18,429
  22,713
  27,662
  33,225
  39,405
  46,198
  53,596
  61,589
  70,161
  79,301
  88,994
  99,228
  109,992
  121,281
  133,089
  145,416
  158,263
  171,639
  185,552
  200,015
  215,047
Change in working capital, $m
  180
  -79
  -115
  -161
  -219
  -289
  -372
  -468
  -574
  -690
  -815
  -946
  -1,082
  -1,220
  -1,359
  -1,498
  -1,635
  -1,770
  -1,903
  -2,032
  -2,158
  -2,281
  -2,402
  -2,521
  -2,638
  -2,756
  -2,874
  -2,993
  -3,114
  -3,238
  -3,365
Cash from operations, $m
  501
  1,221
  1,816
  2,630
  3,728
  5,164
  6,996
  9,275
  12,051
  15,363
  19,244
  23,659
  28,743
  34,445
  40,764
  47,696
  55,232
  63,359
  72,064
  81,333
  91,151
  101,508
  112,394
  123,802
  135,728
  148,172
  161,137
  174,632
  188,665
  203,253
  218,412
Maintenance CAPEX, $m
  0
  -134
  -213
  -330
  -493
  -715
  -1,009
  -1,388
  -1,863
  -2,446
  -3,147
  -3,975
  -4,936
  -6,035
  -7,274
  -8,654
  -10,176
  -11,837
  -13,635
  -15,568
  -17,631
  -19,823
  -22,140
  -24,579
  -27,139
  -29,819
  -32,618
  -35,537
  -38,577
  -41,739
  -45,028
New CAPEX, $m
  -150
  -1,524
  -2,221
  -3,120
  -4,247
  -5,614
  -7,225
  -9,072
  -11,137
  -13,395
  -15,813
  -18,356
  -20,985
  -23,667
  -26,369
  -29,063
  -31,728
  -34,347
  -36,910
  -39,414
  -41,858
  -44,248
  -46,591
  -48,900
  -51,186
  -53,464
  -55,749
  -58,058
  -60,406
  -62,808
  -65,281
Cash from investing activities, $m
  -1,059
  -1,658
  -2,434
  -3,450
  -4,740
  -6,329
  -8,234
  -10,460
  -13,000
  -15,841
  -18,960
  -22,331
  -25,921
  -29,702
  -33,643
  -37,717
  -41,904
  -46,184
  -50,545
  -54,982
  -59,489
  -64,071
  -68,731
  -73,479
  -78,325
  -83,283
  -88,367
  -93,595
  -98,983
  -104,547
  -110,309
Free cash flow, $m
  -558
  -437
  -619
  -820
  -1,012
  -1,165
  -1,238
  -1,184
  -949
  -478
  284
  1,329
  2,822
  4,743
  7,121
  9,978
  13,328
  17,175
  21,519
  26,351
  31,662
  37,438
  43,663
  50,323
  57,403
  64,889
  72,770
  81,037
  89,683
  98,705
  108,103
Issuance/(repayment) of debt, $m
  1,533
  3,457
  5,523
  7,757
  10,558
  13,957
  17,962
  22,554
  27,689
  33,302
  39,314
  45,635
  52,173
  58,841
  65,558
  72,256
  78,880
  85,391
  91,764
  97,989
  104,066
  110,007
  115,834
  121,573
  127,256
  132,920
  138,602
  144,341
  150,178
  156,151
  162,299
Issuance/(repurchase) of shares, $m
  -750
  58
  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 from financing (excl. dividends), $m  
  682
  3,515
  5,523
  7,757
  10,558
  13,957
  17,962
  22,554
  27,689
  33,302
  39,314
  45,635
  52,173
  58,841
  65,558
  72,256
  78,880
  85,391
  91,764
  97,989
  104,066
  110,007
  115,834
  121,573
  127,256
  132,920
  138,602
  144,341
  150,178
  156,151
  162,299
Total cash flow (excl. dividends), $m
  120
  3,079
  4,904
  6,938
  9,546
  12,792
  16,724
  21,370
  26,740
  32,824
  39,598
  46,964
  54,995
  63,584
  72,679
  82,234
  92,208
  102,566
  113,283
  124,340
  135,728
  147,445
  159,497
  171,896
  184,659
  197,808
  211,371
  225,378
  239,861
  254,857
  270,402
Retained Cash Flow (-), $m
  610
  -766
  -614
  -862
  -1,173
  -1,551
  -1,996
  -2,506
  -3,077
  -3,700
  -4,368
  -5,071
  -5,797
  -6,538
  -7,284
  -8,028
  -8,764
  -9,488
  -10,196
  -10,888
  -11,563
  -12,223
  -12,870
  -13,508
  -14,140
  -14,769
  -15,400
  -16,038
  -16,686
  -17,350
  -18,033
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
 
  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
 
  2,313
  4,290
  6,076
  8,373
  11,241
  14,728
  18,864
  23,663
  29,124
  35,230
  41,893
  49,198
  57,046
  65,395
  74,206
  83,444
  93,078
  103,087
  113,452
  124,165
  135,222
  146,627
  158,388
  170,519
  183,040
  195,971
  209,340
  223,175
  237,506
  252,369
Discount rate, %
 
  12.70
  13.34
  14.00
  14.70
  15.44
  16.21
  17.02
  17.87
  18.76
  19.70
  20.69
  21.72
  22.81
  23.95
  25.15
  26.40
  27.72
  29.11
  30.56
  32.09
  33.70
  35.38
  37.15
  39.01
  40.96
  43.01
  45.16
  47.41
  49.79
  52.27
PV of cash for distribution, $m
 
  2,052
  3,340
  4,101
  4,837
  5,484
  5,980
  6,278
  6,351
  6,196
  5,833
  5,295
  4,651
  3,947
  3,237
  2,566
  1,965
  1,453
  1,038
  715
  475
  304
  187
  111
  63
  34
  18
  9
  4
  2
  1
Current shareholders' claim on cash, %
  100
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4

Coty Inc., together with its subsidiaries, manufactures, markets, and distributes beauty products worldwide. The company operates through four segments: Fragrances, Color Cosmetics, Skin & Body Care, and Brazil Acquisition. It offers fragrances under the Calvin Klein, Marc Jacobs, Davidoff, Chloé, Balenciaga, Beyoncé, Bottega Veneta, Guess?, Katy Perry, Miu Miu, and Roberto Cavalli brand names. The company also provides lip, eye, nail, and facial color products under the Bourjois, Rimmel, Sally Hansen, and OPI brands. In addition, it offers shower gels, deodorants, skin care, and sun treatment products under the adidas, Lancaster, philosophy, and Playboy brand names; and hair straighteners, hair dryers, curlers, and hair brushes; and spray, serum, cream, and foam product lines to curl, fix, protect, shine, straighten, and volumize hair. The company also markets its products under the Astor, Coty, Joop!, Jovan, Manhattan, and N.Y.C. New York Color brands. It sells its products through retailers, including hypermarkets, supermarkets, independent and chain drug stores and pharmacies, upscale perfumeries, upscale and mid-tier department stores, nail salons, specialty retailers, duty-free shops and traditional food, and drug and mass retailers. Coty Inc. was founded in 1904 and is headquartered in New York, New York.

FINANCIAL RATIOS  of  Coty Cl A (COTY)

Valuation Ratios
P/E Ratio 30.8
Price to Sales 0.8
Price to Book 18.4
Price to Tangible Book
Price to Cash Flow 13.2
Price to Free Cash Flow 18.9
Growth Rates
Sales Growth Rate 99.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -25.4%
Cap. Spend. - 3 Yr. Gr. Rate -7.7%
Financial Strength
Quick Ratio 2
Current Ratio 0.1
LT Debt to Equity 1093.3%
Total Debt to Equity 1138.3%
Interest Coverage 4
Management Effectiveness
Return On Assets 4.5%
Ret/ On Assets - 3 Yr. Avg. 3.1%
Return On Total Capital 5.3%
Ret/ On T. Cap. - 3 Yr. Avg. 3%
Return On Equity 32.3%
Return On Equity - 3 Yr. Avg. 16.6%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 63.3%
Gross Margin - 3 Yr. Avg. 60.8%
EBITDA Margin 6.9%
EBITDA Margin - 3 Yr. Avg. 8.3%
Operating Margin 5.1%
Oper. Margin - 3 Yr. Avg. 4.2%
Pre-Tax Margin 3.2%
Pre-Tax Margin - 3 Yr. Avg. 2.5%
Net Profit Margin 2.5%
Net Profit Margin - 3 Yr. Avg. 1.9%
Effective Tax Rate 14.7%
Eff/ Tax Rate - 3 Yr. Avg. -14%
Payout Ratio 41.4%

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 $8754 million for the last fiscal year's total revenue generated by Coty Cl A. The default revenue input number comes from 2016 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 12.7%, 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 93%.

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 29.1%.

Life of production assets of 19.1 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 -1.5%. 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 - $360 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 748.064 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 $14.7 billion.

RELATED COMPANIES Price Int.Val. Rating
AVP Avon Products 2.75 0.28  str.sell
EL Estee Lauder C 101.07 69.75  sell
REV Revlon Cl A 18.00 69.70  str.buy
UN Unilever ADR 58.91 33.04  sell
IPAR Inter Parfums 38.85 68.65  str.buy
UL Unilever ADR 57.54 33.87  sell

COMPANY NEWS

▶ 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]
▶ Coty, Inc. Value Analysis (NYSE:COTY) : July 4, 2017   [Jul-04-17 03:55PM  Capital Cube]
▶ Weekly Top Insider Buys Highlight for the Week of June 23   [Jun-24-17 06:40PM  GuruFocus.com]
▶ Ralph Macchio Coty Chief Scientific Officer to Retire   [Jun-13-17 10:30AM  Business Wire]
▶ ETFs with exposure to Coty, Inc. : June 9, 2017   [Jun-09-17 01:23PM  Capital Cube]
▶ Bet on beauty stocks?   [May-26-17 05:21PM  CNBC Videos]
▶ [$$] Ralph Lauren hires new chief executive from P&G   [May-17-17 01:52PM  Financial Times]
▶ The Trick to Selling Beauty Products Online   [12:52PM  The Wall Street Journal]
▶ ETFs with exposure to Coty, Inc. : May 16, 2017   [May-16-17 12:49PM  Capital Cube]
▶ Consumer Cos. Soar on Positive Earnings Surprise   [May-10-17 06:29PM  Investopedia]
▶ Why Shares of Coty Inc. Jumped Today   [01:24PM  Motley Fool]
▶ Coty reports 3Q loss   [06:36AM  Associated Press]
▶ Coty Inc. Declares Quarterly Dividend   [06:30AM  Business Wire]
▶ Coty, Inc. Value Analysis (NYSE:COTY) : May 8, 2017   [May-08-17 05:47PM  Capital Cube]
▶ Is Coty an Opportunity for Value Investors?   [May-02-17 11:03AM  Investopedia]
▶ Coty Appoints Sabine Chalmers to Its Board of Directors   [Apr-18-17 09:00AM  Business Wire]
▶ Top 4 Cosmetics Stocks of 2017   [Apr-13-17 11:44AM  Investopedia]
▶ Coty, DryShips Sink into Mondays 52-Week Low Club   [Apr-10-17 04:05PM  24/7 Wall St.]
▶ [$$] Burberry licenses make-up and fragrances to Coty   [Apr-03-17 11:00AM  at Financial Times]
▶ Coty Buys Rights to Burberrys Luxury Lines   [09:21AM  Investopedia]
▶ EU Court to Rule on Luxury Brands Online Ban   [Mar-31-17 10:02AM  Investopedia]
▶ Weekly Top Insider Buys Highlight for the Week of March 17   [Mar-19-17 11:13AM  GuruFocus.com]
▶ The Hot Stock: Flir Systems Gains 8.1%   [04:27PM  at Barrons.com]
▶ [$$] Peltz puts pressure on P&G with $3bn-plus stake   [Feb-14-17 07:07PM  at Financial Times]
▶ [$$] Coty Earnings Fall   [Feb-09-17 01:44PM  at The Wall Street Journal]
Stock chart of COTY 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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