Spotting Winners: Coty (NYSE:COTY) And Personal Care Stocks In Q2
As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the personal care industry, including Coty (NYSE:COTY) and its peers.
While personal care products products may seem more discretionary than food, consumers tend to maintain or even boost their spending on the category during tough times. This phenomenon is known as "the lipstick effect" by economists, which states that consumers still want some semblance of affordable luxuries like beauty and wellness when the economy is sputtering. Consumer tastes are constantly changing, and personal care companies are currently responding to the public’s increased desire for ethically produced goods by featuring natural ingredients in their products.
The 13 personal care stocks we track reported a mixed Q2. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 14.6% below.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 10.4% since the latest earnings results.
Coty (NYSE:COTY)
With a portfolio boasting many household brands, Coty (NYSE:COTY) is a beauty products powerhouse with offerings in cosmetics, fragrances, and skincare.
Coty reported revenues of $1.36 billion, flat year on year. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with a miss of analysts’ earnings estimates and underwhelming earnings guidance for the full year.
Unsurprisingly, the stock is down 20.6% since reporting and currently trades at $7.56.
Read our full report on Coty here, it’s free.
Best Q2: The Honest Company (NASDAQ:HNST)
Co-founded by actress Jessica Alba, The Honest Company (NASDAQ:HNST) sells diapers and wipes, skin care products, and household cleaning products.
The Honest Company reported revenues of $93.05 million, up 10.1% year on year, outperforming analysts’ expectations by 6.8%. The business had an exceptional quarter with an impressive beat of analysts’ earnings and gross margin estimates.
The Honest Company scored the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 10.9% since reporting. It currently trades at $3.60.
Is now the time to buy The Honest Company? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: BeautyHealth (NASDAQ:SKIN)
Operating in the emerging beauty health category, the appropriately named BeautyHealth (NASDAQ:SKIN) is a skincare company best known for its Hydrafacial product that cleanses and hydrates skin.
BeautyHealth reported revenues of $90.59 million, down 22.9% year on year, falling short of analysts’ expectations by 8%. It was a disappointing quarter as it posted revenue guidance for next quarter missing analysts’ expectations and a miss of analysts’ operating margin estimates.
BeautyHealth delivered the weakest performance against analyst estimates and weakest full-year guidance update in the group. Interestingly, the stock is up 30.2% since the results and currently trades at $1.68.
Read our full analysis of BeautyHealth’s results here.
Herbalife (NYSE:HLF)
With the first products sold out of the trunk of the founder’s car, Herbalife (NYSE:HLF) today offers a portfolio of shakes, supplements, personal care products, and weight management programs to help customers reach their nutritional and fitness goals.
Herbalife reported revenues of $1.28 billion, down 2.5% year on year. This number came in 3.6% below analysts' expectations. Aside from that, it was a mixed quarter as it also logged an impressive beat of analysts’ EBITDA estimates but a miss of analysts’ organic revenue growth estimates.
The stock is down 45.2% since reporting and currently trades at $6.73.
Read our full, actionable report on Herbalife here, it’s free.
Edgewell Personal Care (NYSE:EPC)
Boasting brands such as Banana Boat, Schick, and Skintimate, Edgewell Personal Care (NYSE:EPC) sells personal care products in the skin and sun care, shave, and feminine care categories.
Edgewell Personal Care reported revenues of $647.8 million, flat year on year. This number met analysts’ expectations. Zooming out, it was a satisfactory quarter as it also recorded an impressive beat of analysts’ EBITDA estimates but a miss of analysts’ organic revenue growth estimates.
The stock is down 8.3% since reporting and currently trades at $34.50.
Read our full, actionable report on Edgewell Personal Care here, it’s free.
Market Update
After much suspense, the Federal Reserve cut its policy rate by 50bps (half a percent) in September 2024. This marks the central bank’s first easing of monetary policy since 2020 and the end of its most pointed inflation-busting campaign since the 1980s. Inflation had begun to run hot in 2021 post-COVID due to a confluence of factors such as supply chain disruptions, labor shortages, and stimulus spending. While CPI (inflation) readings have been supportive lately, employment measures have prompted some concern. Going forward, the markets will debate whether this rate cut (and more potential ones in 2024 and 2025) is perfect timing to support the economy or a bit too late for a macro that has already cooled too much.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and them to your watchlist. These companies are posied for grow regardless of the political or macroeconomic climate.
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