The Cooper Companies Inc (COO, Financial) recently recorded a daily loss of 3.04%, contributing to a 3-month decline of 1.32%. With an Earnings Per Share (EPS) of 1.46, investors might wonder if the stock is modestly undervalued. This article delves into the valuation analysis of The Cooper, encouraging readers to explore the intricate details of its market position and financial health.
Company Overview
The Cooper Companies Inc operates primarily through two segments: CooperVision and CooperSurgical. CooperVision deals extensively in the contact lens market, holding approximately a quarter of the U.S. market share with popular brands like Proclear and Biofinity. On the other hand, CooperSurgical focuses on reproductive and women's health, offering a broad range of medical devices. Currently, The Cooper's stock price stands at $92.01, with a market capitalization of $18.30 billion, positioned below its GF Value of $103.31, suggesting a potential undervaluation.
Understanding GF Value
The GF Value is a proprietary measure reflecting the intrinsic value of a stock, calculated based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. For The Cooper, the GF Value suggests the stock is modestly undervalued. This valuation implies that the stock's market price is less than its estimated fair value, potentially offering a higher future return relative to its current trading price.
Financial Strength and Stability
Assessing a company's financial strength is crucial to understanding its investment risks. The Cooper's cash-to-debt ratio stands at 0.05, indicating a weaker position compared to industry peers. However, the overall financial strength rating of 6 out of 10 suggests that The Cooper maintains a fair level of financial health. Below is a visual representation of The Cooper's debt and cash flow over recent years.
Profitability and Growth Prospects
The Cooper has demonstrated consistent profitability, with a strong operating margin of 14.64%, ranking better than 77.29% of its industry counterparts. Additionally, the company's growth metrics are robust, with a 3-year average revenue growth rate outperforming 65.95% of competitors in the Medical Devices & Instruments industry. Such sustained growth not only underscores The Cooper's market position but also enhances its long-term investment appeal.
Comparative Analysis of ROIC and WACC
An effective way to gauge a company's profitability and value creation is by comparing its Return on Invested Capital (ROIC) against its Weighted Average Cost of Capital (WACC). For The Cooper, the ROIC is currently at 3.35, while the WACC is at 10.32, indicating that the company needs to improve its efficiency in generating returns on invested capital. Below is the historical comparison of ROIC and WACC for The Cooper.
Conclusion
In conclusion, The Cooper Companies Inc (COO, Financial) appears modestly undervalued according to the GF Value, suggesting potential for higher future returns. With a solid track record of profitability and a fair financial condition, The Cooper merits consideration from investors seeking value. For a deeper understanding of The Cooper's financials, interested parties can explore its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
