Coty Inc. (NYSE:COTY) and Avon Products, Inc. (NYSE:AVP) are both Consumer Goods companies that recently hit new highs. This price action has ruffled more than a few feathers in the investment community, but is one a better investment than the other? To answer this, we will compare the two companies across growth, profitability, risk, return, dividends, and valuation measures.
Coty Inc. (NYSE:COTY) operates in the Personal Products segment of the Consumer Goods sector. The company has grown sales at a 10.70% annual rate over the past five years, putting it in the high growth category. COTY has a net profit margin of -4.10% and is less profitable than the average company in the Personal Products industry. In terms of efficiency, COTY has an asset turnover ratio of 0.4. This figure represents the amount of revenue a company generates per dollar of assets. COTY’s financial leverage ratio is 1.17, which indicates that the company’s asset base is primarily funded by equity capital. Company’s return on equity, which is really just the product of the company’s profit margin, asset turnover, and financial leverage ratios, is -4.00%, which is worse than the Personal Products industry average ROE.
Coty Inc. (COTY) pays out an annual dividend of 0.50 per share. At the current valuation, this equates to a dividend yield of 2.35%.Stock’s free cash flow yield, which represents the amount of cash available to investors before dividends, expressed as a percentage of the stock price, is 0.66. The average investment recommendation for COTY, taken from a group of Wall Street Analysts, is 2.50, or a hold.
Over the past three months, Coty Inc. insiders have been net sellers, acquiring a net of 2,808,495 shares. This implies that insiders have been feeling relatively bullish about the outlook for COTY. Insider activity and sentiment signals are important to monitor because they can shed light on how “risky” a stock is perceived to be at it’s current valuation. Knowing this, it makes sense to look at beta, a measure of market risk. COTY has a beta of 0.25 and therefore an below average level of market volatility.
Avon Products, Inc. (NYSE:AVP) operates in the Personal Products segment of the Consumer Goods sector. AVP has increased sales at a -12.40% CAGR over the past five years, and is considered a low growth stock. The company has a net profit margin of -1.80% and is less profitable than the average Personal Products player. AVP’s return on equity of 12.20% is worse than the Personal Products industry average.
The average analyst recommendation for AVP is 3.00, or a hold.
Avon Products, Inc. insiders have sold a net of 0 shares during the past three months, which implies that the company’s top executives have been feeling bearish about the stock’s outlook. Finally, AVP’s beta of 1.63 indicates that the stock has an below average level of market risk.
Coty Inc. (NYSE:COTY) scores higher than Avon Products, Inc. (NYSE:AVP) on 7 of the 13 measures compared between the two companies. COTY has the better fundamentals, scoring higher on growth metrics.