Coty Inc (COTY)

[$hylo]

Coty IPO Should Be Bought By Investors
http://seekingalpha.com/article/1495892-coty-ipo-should-be-bought-by-investors

When deciding how shares of Coty stack up against their peers, it's important to look at sales from the last fiscal year. With a market captilization of $26.28 billion, Estee Lauder trades at 2.7 times last year's sales. The company also trades at 2.6 times estimated forward annual sales of $10.20 billion.

Rival Elizabeth Arden, with a small market capitalization of $1.4 billion, trades at a much cheaper range. Shares trade at only 1.1 times last year's annual sales.

If we assume the mid-point of $17.50 per share and total outstanding shares of 383.8 million, shares of Coty will trade with a price to sales of only 1.5 times last year's sales. If the price jumps to $20 per share, as I believe it will, shares of Coty still trade for only 1.7 times last year's sales.

With this equation, you can see that Coty will most likely be offered to investors with a cheaper price to sales valuation than rival Estee Lauder. The company also will see better growth through recent acquisitions and dominance in all three categories.

Coty shares will price higher than their initial range due to demand. However, I think shares are still worth buying up to $22. Revenue is growing in all three sectors thanks to new products, acquisitions, and new country entry. Once public, I expect Coty to go after even bigger names in its acquisition quest, adding regional leaders and product leaders into its huge base of brands. This is the beauty company that should be in your portfolio going forward.