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The cosmetics industry makes consumer beauty products such as makeup, lotions, shampoos, perfumes, hair colors, and accessories. Companies in this group include Revlon Inc. (REV), Inter Parfums Inc. (IPAR), and South Korea-based Amorepacific Corp. (090430). Although there is no direct benchmark for the cosmetics industry, most cosmetics companies are considered part of the consumer staples sector.
Cosmetics stocks, represented by the Consumer Staples Select Sector SPDR ETF (XLP), have underperformed the broader market. XLP has provided investors with a total return of 19.2% over the past 12 months, below the Russell 1000’s total return of 34.8%. These market performance numbers and the statistics in the tables below are as of June 8, 2021.
Here are the top 3 cosmetics stocks with the best value, fastest growth, and the most momentum.
These are the cosmetics stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
- Kao Corp.: Kao is a Japan-based manufacturer of household and chemical products. In addition to cosmetics, the company also sells laundry and cleaning products, hygiene, fatty chemicals, and edible oils.
- Ulta Beauty Inc.: Ulta Beauty operates a chain of beauty stores throughout the U.S. The company sells cosmetics, skin and hair care products, fragrances, and salon services. It is the one exception in our list in that it is considered part of the consumer discretionary sector rather than the consumer staples sector. Ulta announced in late May financial results for Q1 of its 2021 fiscal year (FY), the three-month period ended May 1, 2021. The company posted net income of $230.3 million, a significant turnaround from a net loss of $78.5 million reported in the year-ago quarter. Net sales rose 65.2%. The company said its sales growth was driven by improving consumer confidence as well as government stimulus payments and the easing of restrictions related to COVID-19.
- The Estée Lauder Companies Inc.: Estée Lauder manufactures and markets a wide range of skin care, makeup, fragrance, and hair care products. The company announced in early May financial results for Q3 FY 2021, which ended March 31, 2021. It posted net earnings of $458 million, a major improvement from the year-ago quarter’s net loss of $4 million. Net sales rose 15.5%. Estée Lauder indicated that its business was still experiencing some disruptions related to the COVID-19 pandemic.
These are the top cosmetics stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
|Fastest Growing Cosmetics Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|Ulta Beauty Inc. (ULTA)||341.33||18.7||N/A (see company description)||65.2|
|e.l.f. Beauty Inc. ( ELF)||27.97||1.4||N/A (see company description)||24.0|
|The Estée Lauder Companies Inc. (EL)||300.02||108.8||N/A (see company description)||15.5|
- Ulta Beauty Inc.: See above for company description. Because net income changed from negative in the year-ago quarter to positive in the most recent quarter, we cannot calculate an EPS growth figure for the table above.
- e.l.f. Beauty Inc.: e.l.f. Beauty provides mainly low-priced cosmetics products for the eyes, lips, and face. It offers eyeliners, lipsticks, powder, skin care products, and more. The company announced in late May financial results for Q4 FY 2021, which ended March 31, 2021. Its net loss narrowed to $24,000 from $341,000 in the year-ago quarter, and net sales rose 24.0% year-over-year (YOY). Due to the net loss for the most recent quarter we cannot calculate an EPS growth figure for the table above. e.l.f. Beauty said that its sales growth was primarily driven by e-commerce, international, and its national retailers.
- The Estée Lauder Companies Inc.: See above for company description. Because net income changed from negative in the year-ago quarter to positive in the most recent quarter, we cannot calculate an EPS growth figure for the table above.
These are the cosmetics stocks that had the highest total return over the last 12 months.
|Cosmetics Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|e.l.f. Beauty Inc. (ELF)||27.97||1.4||49.5|
|The Estée Lauder Companies Inc. (EL)||300.02||108.8||47.6|
|Coty Inc. ( COTY)||9.12||7.0||46.9|
|Consumer Staples Select Sector SPDR ETF (XLP)||N/A||N/A||19.2|
- e.l.f. Beauty Inc.: See above for company description.
- The Estée Lauder Companies Inc.: See above for company description.
- Coty Inc.: Coty is a maker and distributor of beauty products including color cosmetics, hygiene products, fragrances, sun care products, and skin treatments. Coty products are sold in department stores, retailers, and airport duty free shops around the world. The company announced in May financial results for Q3 FY 2021, which ended March 31, 2021. It posted net income of $12.7 million, a significant change from the net loss of $264.4 million reported in the year-ago quarter. Net sales fell 3.3%. Cost of sales fell at a faster pace than sales declined, bolstering net income. Coty indicated that it continued to face pandemic-related challenges during the quarter, such as lockdowns, particularly in western Europe.
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