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Is Cooper Companies (COO) Poised for Earnings Beat in Q4?

Zacks Equity Research

The Cooper Companies Inc. COO is set to report fourth-quarter fiscal 2016 results after the market closes on Dec 8.

Last quarter, the company posted a positive earnings surprise of 0.9%. Let’s see how things are shaping up for this announcement. The company boasts a solid earnings track record, having beaten estimates in three of the trailing four quarters. The average earnings surprise over the last four quarters is a positive 4.68%.

We expect the company to post an earnings beat again in the soon-to-be-reported quarter.

COOPER COS Price and EPS Surprise


COOPER COS Price and EPS Surprise | COOPER COS Quote

Why a Likely Positive Surprise?

Our proven model shows that Cooper Companies is likely to beat on earnings because it has the right combination of the two key ingredients.

Zacks ESP: Cooper Companies’ Earnings ESP stands at +0.45%. This is because the company’s Most Accurate estimate is $2.25 while the Zacks Consensus Estimate is pegged at $2.24. A favorable ESP serves as a meaningful and leading indicator of a likely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Cooper Companies currently has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The combination of Cooper Companies’ favorable Zacks Rank #3 and positive ESP makes us reasonably confident of an earnings beat.

What is Driving the Better-than-Expected Earnings?

We believe strength at the CooperSurgical segment, driven by the expanding presence in the fertility segment, will drive top-line growth. The company’s focus on genetic testing will also continue to drive growth in our view. We note that Cooper Companies posted a positive earnings surprise of 4.68% on average over the last four quarters.

Cooper Companies expects complementary IVF products that were acquired through the takeover of Research Instruments. A small fertility micro-needle company will add to growth in the to-be reported quarter.

We are optimistic about the company’s balanced growth performance across all segments and expect the same to be reflected in the fiscal fourth quarter itself. Results from the EMEA and Asia-Pacific regions are also expected to be strong. However, volatile foreign exchange is likely to hurt the company’s results in the quarter to-be-reported.

Price Movement

Cooper Companies’ stock gained about 22.86% in the last one year, comparing favorably with the Zacks categorized Medical/Dental Supplies industry’s decline of 9.56%. This could have been triggered by the expanding presence of the company through its focus on accretive acquisitions.


Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat:

Cambrex Corporation CBM has an Earnings ESP of +1.90% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Quintiles IMS Holdings, Inc. Q has an Earnings ESP of +0.93% and a Zacks Rank #1.

Adamas Pharmaceuticals, Inc. ADMS has an Earnings ESP of +1.16% and a Zacks Rank #2.

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