## Beauty Market's Four Rising Stars: Where to Position Your Portfolio as Cosmetics Reset

The cosmetics sector is at a critical inflection point. While the Zacks Cosmetics industry currently ranks #177 out of 243 sectors—placing it in the bottom 27%—four companies stand out: **The Estee Lauder Companies Inc. (EL)**, **Coty Inc. (COTY)**, **Helen of Troy Limited (HELE)**, and **European Wax Center, Inc. (EWCZ)**. These players are deploying distinct strategies to navigate mounting pressures and emerge stronger in 2026.

### The Headwinds Beauty Brands Face Right Now

The beauty industry is wrestling with a perfect storm of challenges. Consumer discretionary spending has softened significantly as households tighten budgets. Retail inventory restocking remains uneven, creating unpredictable demand patterns. Most critically, cosmetic packaging now ranks among the top cost pressures, along with ingredient sourcing, logistics, and promotional spending—all squeezing margins industry-wide.

The valuation picture reflects this turbulence. The Cosmetics sector trades at 28.99X forward P/E versus the S&P 500's 23.45X and Consumer Staples' 16.42X. Historically, the industry has ranged from 20.22X to 41.34X over five years, with a median of 31.02X. Over the past 12 months, the industry delivered 10% returns, trailing the S&P 500's 18.3% but outpacing the broader Consumer Staples sector's 2.5%.

Analysts are tightening their earnings outlook. Since October 2025, consensus estimates for current-year earnings have declined 6.1%, signaling reduced confidence in near-term growth potential.

### Four Companies Positioned for Growth

**The Estee Lauder (EL) — Strong Buy Status**

Ranked #1 by Zacks, Estee Lauder is executing a comprehensive "Beauty Reimagined" turnaround. The company's Profit Recovery and Growth Plan targets market share gains in high-growth regions and digital channels while aggressively addressing cosmetic packaging efficiency and operational streamlining. Strategic investments in AI-driven personalization and product innovation are fueling brand momentum. The consensus EPS estimate stands at $2.15 for the current fiscal year—up 0.5% in 30 days. The stock has rallied 39.7% over six months.

**Coty (COTY) — Hold with Momentum**

A leading beauty distributor, Coty carries a Zacks Rank #3 designation. The company is stabilizing its Consumer Beauty segment while expanding its prestige fragrance and makeup offerings. Its "All In to Win" cost-optimization initiative is driving margin expansion, particularly through smarter sourcing strategies that address cosmetic packaging inflation. E-commerce acceleration and Direct-to-Consumer channels are core growth levers. Current-year EPS consensus remains stable at 42 cents, though the stock has retreated 34% over six months—potentially offering a contrarian entry point.

**Helen of Troy (HELE) — Quality Brand Builder**

Holding Zacks Rank #3, Helen of Troy spans Beauty, Housewares, and Health segments with premium, higher-margin Leadership Brands. Project Pegasus, a global restructuring initiative, aims to improve operating margins and redirect resources toward brand investment. The Elevate for Growth strategy emphasizes innovation and expanded distribution. Current-year EPS stands at $4.05 (down 1.2% in 30 days). The stock has declined 26% in six months.

**European Wax Center (EWCZ) — Franchise Growth Play**

The largest U.S. waxing service franchisor, EWCZ operates with a Zacks Rank #3. The company is driving guest acquisition while improving customer retention through technology-enabled marketing and enhanced operational productivity. Franchise partner engagement is a competitive moat. Current-year EPS consensus sits at 61 cents, though revisions have declined 4.7% in 30 days. The stock has tumbled 33.6% in six months.

### Why These Four Matter Now

Innovation and digitalization remain industry pillars. Cosmetic packaging now incorporates sustainable materials and smart design to offset cost pressures while appealing to environmentally conscious consumers. Science-backed formulations, clean beauty trends, and virtual try-on technologies are reshaping competitive dynamics. Companies excelling at this transformation—particularly Estee Lauder and Coty—are differentiating themselves.

The broader market reset for 2026 hinges on how effectively these companies manage cost inflation, optimize cosmetic packaging logistics, and capture digital-first consumer segments. While macro uncertainty persists, operational excellence and brand equity will likely drive outperformance within this sector.