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 16.2% over the past 12 months, below the Russell 1000’s total return of 39.0%. These market performance numbers and the statistics in the tables below are as of Sept. 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.
|Best Value Cosmetics Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|Kao Corp. (KAOOY)||12.50||29.7||24.9|
|Ulta Beauty Inc. (ULTA)||379.33||20.6||29.2|
|The Estée Lauder Companies Inc. (EL)||337.57||122.0||43.3|
- 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, fatty chemicals, and edible oils. Kao released financial results for H1 2021 on Aug. 3, including a 3.7% year-over-year (YOY) increase in net income on 1.2% YOY improvement in net sales. These results were impacted by the shrinking household and personal care products market in Japan as a result of the COVID-19 pandemic.
- 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. Net income and net sales surged YOY for Q2 2021, driven by a recovery in consumer confidence and reduced COVID-19 restrictions compared with one year prior.
- The Estée Lauder Companies Inc.: Estée Lauder manufactures and markets a wide range of skin care, makeup, fragrance, and hair care products. The company reported net earnings of $1.0 billion for Q4 FY 2021, ended June 30, 2021, compared with a loss in the prior-year quarter on surging net sales. Growth was driven by strong performances in its Skin Care, luxury and artisanal Fragrance, Asia/Pacific, and global Online businesses.
These are the top cosmetics stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general.
|Fastest Growing Cosmetics Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|Ulta Beauty Inc. (ULTA)||379.33||20.6||3,160||60.2|
|Coty Inc. (COTY)||9.28||7.1||N/A (see company description)||89.6|
|The Estée Lauder Companies Inc. (EL)||337.57||122.0||N/A (see company description)||62.0|
- Ulta Beauty Inc.: See company description above.
- Coty Inc.: Coty is a maker and distributor of beauty products including color cosmetics, hygiene products, fragrances, sun care products, and skin treatments. Coty products are sold in department stores, retailers, and airport duty free shops around the world. Because Coty’s EPS was negative for the most recent quarter, we cannot calculate an EPS growth figure for the table above.
- The Estée Lauder Companies Inc.: See company description above. Because EPS changed from negative in the year-ago quarter to positive in the most recent quarter, we cannot calculate an EPS growth figure for the table above.
These are the cosmetics stocks that had the highest total return over the last 12 months.
|Cosmetics Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Coty Inc. (COTY)||9.28||7.1||139.8|
|e.l.f. Beauty Inc. (ELF)||30.89||1.6||61.8|
|Ulta Beauty Inc. (ULTA)||379.33||20.6||57.7|
|Consumer Staples Select Sector SPDR ETF (XLP)||N/A||N/A||16.2|
- Coty Inc. See company description 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. For its Q1 FY 2022, ended June 30, 2021, net income rose more than five-fold while net sales climbed by 50.4% YOY. The company attributed growth in net sales to the strength of both national and international retailers.
- Ulta Beauty Inc.: See company description above.
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