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COO Stock Study (11-7-25)

Posted by on March 7, 2025 at 07:01 | Last modified: November 7, 2025 12:02

I recently did a stock study on Cooper Companies, Inc. (COO, $69.00).

M* writes:

     > CooperCompanies is one of the largest eyecare companies in the
     > US. It operates in two segments: CooperVision and CooperSurgical.
     > CooperVision is a pure-play contact lens business with a suite of
     > spherical, multifocal, and toric contact lenses. The company also
     > has one of the most comprehensive specialty lens portfolios in
     > the world. With brands including Proclear, Biofinity, MyDay, and
     > Clariti, Cooper controls roughly one fourth of the US contact lens
     > market. CooperSurgical, founded in 1990, is made up of
     > equipment related to reproductive care, fertility, and women’s
     > care. Cooper has the broadest medical device coverage of the
     > entire IVF cycle. It also has Paragard, the only hormone-free
     > IUD in the US, and controls 17% of the US IUD market.

Over the past decade, the medium-size company has grown sales and earnings at annualized rates of 8.7% and 5.0%, respectively [excluding ’21 due to $14.79 EPS spike resulting largely from one-time “recognition of deferred tax assets following an intra-group transfer of intellectual property to a UK subsidiary… in the third quarter of 2021” (Google AI) that would otherwise inflate growth to 9.4%/year]. Lines are mostly up, straight, and parallel except for sales dip in ’20 and EPS declines in ’18, ’20, and ’23 (FY ends Oct 31). Five- (10-) year EPS R^2 is 0.55 (0.17) and Value Line (VL) gives an Earnings Predictability score of 60.

Over the past decade, PTPM is about even with peer and industry averages while ranging from 11.0% in ’20 to 18.4% in ’17 with a last-5-year mean of 13.7%. ROE is about even with peer and industry averages while ranging from 3.9% in ’23 to 12.7% in ’19 (excluding 43.0% upside outlier in ’21) with a last-5-year mean of 5.1%. Debt-to-Capital is slightly lower than peer and industry averages while decreasing from 33.6% in ’15 to 24.2% in ’24 with a last-5-year mean of 26.5%.

Quick Ratio is 0.91 and Interest Coverage is 7.0 per M* who assigns “Narrow” Economic Moat, gives “Standard” rating for Capital Allocation, and a B grade for Financial Health (per BI website). VL gives an A grade for Financial Strength.

With regard to sales growth:

My 4.0% per year forecast is below the range.

With regard to EPS growth:

My 7.0% per year forecast is below the long-term estimate range [mean of six: 10.9%]. Initial value is ’24 EPS of $1.96/share rather than 2025 Q3 $2.03 (annualized).

My Forecast High P/E is 33.0. Over the past 10 years, high P/E ranges from 7.8 in ’21 (offset by 76 in ’20) to 99.6 in ’18 [due to a low Q3 EPS of $0.65 with stock price around $65 per Google AI, which may not be split-adjusted] for a last-5-year mean of 53.0 and a last-5-year-mean-average P/E of 43.5. I am toward the low end of the range (only ’21 is less).

My Forecast Low P/E is 29.0. Over the past 10 years, low P/E ranges from 5.4 in ’21 to 77.0 in ’18 (see above) with a last-5-year mean of 33.9. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) is $48.00. Default ($41.20) based on initial value given above seems unreasonably low at 40.3% (33.3%) less than the previous close (52-week low). My [arbitrary] selection is 30.4% (22.3%) less, respectively.

Over the past decade, Payout Ratio (PR) has decreased from 1.4% in ’15 to 0.0% in ’24. Since the dividend is still suspended, I am forecasting zero.

These inputs land COO in the HOLD zone with a U/D ratio of 1.0. Total Annualized Return (TAR) is 5.7%.

PAR (using Forecast Average—not High—P/E) of 1.5% is less than the current risk-free rate. If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR but even that is less than I seek for a medium-size company.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on only five studies done in the past 90 days (my study excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 6.0%, 12.7%, 45.0, 29.7, and 0.5%. Although such a small sample size precludes any legit comparison, I am lower across the board. VL projects future average annual P/E of 22.0 that is much less than mine (31.0).

MS high / low EPS are $4.23 / $2.03 versus my $2.75 / $1.96 (per share). VL’s $5.50 high EPS is 100% greater than mine (offsets future P/E difference just mentioned).

MS LSPF of $57.00 implies a Forecast Low P/E of 28.1 versus the above-stated 29.7. MS LSPF is 5.5% less than the default $2.03/share * 29.7 = $60.29 resulting in more conservative zoning. MS LSPF is 18.8% greater than mine, however.

MOS is robust in this study because my inputs are near or below historical/analyst averages/ranges. Tiny sample size aside, MS TAR (21.3%) exceeding mine by 15.6% per year and my lower LSPF are suggestive of MOS.

With regard to valuation, PEG is 1.7 and 4.5 per Zacks and my projected P/E: somewhat overvalued (4.3 per M*). Relative Value [(current P/E) / 5-year-mean average P/E] is cheap at 0.78. “Quick and dirty DCF” has the stock undervalued by 29%.

Per U/D, COO is a BUY under $58.70/share. BI TAR criterion would be met [90.8 / ((14.87 / 100 ) +1 ) ^ 5] = $45.40 with a forecast high price ~$91 (no dividend).

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