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Why Is Cooper Cos. (COO) Up 9.3% Since Last Earnings Report?

Zacks Equity Research
·4 mins read

It has been about a month since the last earnings report for Cooper Cos. (COO). Shares have added about 9.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Cooper Cos. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Cooper Companies Q3 Earnings & Revenues Top Estimates

The Cooper Companies, Inc. reported third-quarter fiscal 2020 adjusted earnings per share of $2.28, which beat the Zacks Consensus Estimate of $1.58 by 44.3%. However, the bottom line declined 29.4% on a year-over-year basis.

Revenues of the company came in at $578.2 million, surpassing the Zacks Consensus Estimate by 7.8%. However, the top line fell 14.9% from the year-ago quarter.

Fiscal Q3 Segment Details

CooperVision (CVI)

This segment’s revenues totaled $449.3 million, down 11% at constant currency (cc) and 12% on a reported basis.

Per management, the segment saw a noticeable decline in revenues from Single-use sphere lenses (28% of CVI), reflecting a decrease of 13% at cc and 14% on a reported basis. Single-use sphere lenses revenues totaled $126.5 million.

Toric (33% of CVI) revenues amounted to $147.6 million, down 9% both at cc and on a reported basis.

Multifocal (10% of CVI) generated revenues of $46.9 million, down 10% at cc and on reported basis.

Non single-use sphere (29% of CVI) revenues amounted to $128.3 million, down 12% at cc and 13% from the year-ago quarter.

Geographically, the segment witnessed a deterioration in revenues in the Americas (39% of CVI), down 9% at cc and 10% year over year to $176.5 million.

EMEA revenues (37% of CVI) totaled $165.7 million, down 15% at cc and 15% from the prior-year quarter.

Asia Pacific sales (24% of CVI) declined 9% at cc and 9% year over year to $107.1 million.

CooperSurgical (CSI)

This segment posted revenues of $128.9 million, down 24% at cc and 24% on a year-over-year basis.

Sub-segment Office and Surgical products 63% of CSI) accounted for $81.7 million revenues, down 23% at cc and on a year-over-year basis.

Fertility (37% of CSI) revenues were $47.2 million, down 26% year over year and at cc.

Margin Analysis

In the fiscal third quarter, gross profit was $360.8 million, down 19.9% year over year.  Gross margin was 62.4% of net revenues, down 390 basis points (bps) year over year.

Operating income in the quarter totaled $72 million, which plunged 49.4% year over year. Operating margin was 12.5%, down 840 bps from the prior-year quarter.

Financial Position

The company exited the quarter with $127.4 million, up 59.6% on a sequential basis.

Fiscal Fourth-Quarter 2020 Guidance

The company projects total revenues between $665 million and $693 million. While CVI revenue is estimated in the range of $500-$520 million, CSI revenue is expected to be $165-$173 million.

Adjusted EPS is anticipated to range between $3 and $3.20.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 8.74% due to these changes.

VGM Scores

Currently, Cooper Cos. has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Cooper Cos. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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