Unearthing The Cooper (COO)'s True Worth: A Comprehensive Examination of Its Market Value
The Cooper (NASDAQ:COO) has recently experienced a daily gain of 2.87%, though it has suffered a 3-month loss of -18.17%. With an Earnings Per Share (EPS) of 5.53, the question arises: is the stock significantly undervalued? This article presents a comprehensive valuation analysis of The Cooper to answer this question. We invite you to read on and explore the intrinsic value of this stock.
A Snapshot of The Cooper Companies Inc (NASDAQ:COO)
The Cooper Companies is a leading eye care company in the U.S., operating two segments: CooperVision and CooperSurgical. CooperVision focuses on contact lens business, while CooperSurgical provides equipment related to reproductive care, fertility, and women's care. Comparing the stock price and the GF Value, an estimation of fair value, The Cooper appears to be significantly undervalued.
Unpacking the GF Value
The GF Value is a unique measure of a stock's intrinsic value, calculated based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. The GF Value Line on our summary page provides an overview of the fair value at which the stock should ideally be traded.
According to the GF Value, The Cooper's stock appears to be significantly undervalued. With its current price of $319.68 per share and a market cap of $15.80 billion, the long-term return of its stock is likely to be much higher than its business growth.
Examining The Cooper's Financial Strength
Investing in companies with weak financial strength could result in permanent capital loss. Therefore, it's crucial to review a company's financial strength before deciding to buy shares. The Cooper has a cash-to-debt ratio of 0.05, ranking worse than 96.16% of 833 companies in the Medical Devices & Instruments industry. Based on this, GuruFocus ranks The Cooper's financial strength as 6 out of 10, suggesting a fair balance sheet.
Profitability and Growth of The Cooper
Companies that have been consistently profitable over the long term offer less risk for investors. The Cooper has been profitable 10 over the past 10 years. Its operating margin is 14.25%, ranking better than 73.25% of 830 companies in the Medical Devices & Instruments industry. The profitability of The Cooper is ranked 9 out of 10, indicating strong profitability.
One of the most important factors in the valuation of a company is its growth. The average annual revenue growth of The Cooper is 7.8%, ranking better than 51.17% of 727 companies in the Medical Devices & Instruments industry. However, the 3-year average EBITDA growth is 2.3%, ranking worse than 60.41% of 730 companies in the same industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) and weighted average cost of capital (WACC) is another way to assess its profitability. The ROIC measures how well a company generates cash flow relative to the capital it has invested in its business. The WACC is the rate that a company is expected to pay on average to all its security holders to finance its assets. For the past 12 months, The Cooper's ROIC is 3.25, and its WACC is 9.38.
Conclusion
In conclusion, the stock of The Cooper (NASDAQ:COO) appears to be significantly undervalued. The company's financial condition is fair, and its profitability is strong. Its growth ranks worse than 60.41% of 730 companies in the Medical Devices & Instruments industry. To learn more about The Cooper stock, you can check out 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.
This article first appeared on GuruFocus.
