Investment Thesis
Cooper Companies demonstrates solid fundamental strength with robust profitability metrics (67.9% gross margin, 20.8% operating margin) and consistent free cash flow generation ($158.7M FCF with 15.5% margin). While revenue growth is moderate at 5.1% YoY and net income declined 4.4%, the company maintains a healthy balance sheet with conservative leverage (0.22x debt-to-equity) and reasonable liquidity, supported by strong operational cash conversion.
Strengths
- High gross margins (67.9%) indicate strong pricing power and operational efficiency in ophthalmic goods sector
- Consistent free cash flow generation ($158.7M) with FCF margin of 15.5% demonstrates quality earnings and cash conversion capability
- Conservative capital structure with 0.22x debt-to-equity ratio and 3.6x interest coverage provides financial flexibility and low refinancing risk
- Adequate liquidity with $124.9M cash and 1.34x current ratio supports operational needs and strategic opportunities
Risks
- Net income declined 4.4% YoY despite 5.1% revenue growth, signaling margin compression and potential cost control challenges
- Weak return metrics (ROE of 1.6%, ROA of 1.1%) suggest inefficient capital utilization relative to asset base of $12.4B
- Quick ratio of 0.79x indicates potential short-term liquidity pressure if current assets excluding inventory are needed quickly
- Moderate revenue growth of 5.1% YoY in mature ophthalmic sector may reflect limited market expansion or competitive pressures
Key Metrics to Watch
- Net income and operating margin trends - monitor whether profitability stabilizes or continues declining
- Operating cash flow sustainability - ensure cash generation remains robust to support debt service and capex
- Revenue growth acceleration - track whether top-line growth can reaccelerate above 5% to support margin improvement
- Return on equity and capital efficiency - assess whether ROE improvement efforts are taking hold
Financial Metrics
Revenue
1.0B
Net Income
130.8M
EPS (Diluted)
$0.66
Free Cash Flow
158.7M
Total Assets
12.4B
Cash
124.9M
Profitability Ratios
Gross Margin
67.9%
Operating Margin
20.8%
Net Margin
12.8%
ROE
1.6%
ROA
1.1%
FCF Margin
15.5%
Balance Sheet & Liquidity
Current Ratio
1.34x
Quick Ratio
0.79x
Debt/Equity
0.22x
Debt/Assets
32.7%
Interest Coverage
3.62x
Long-term Debt
1.9B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-03-22T19:48:12.559916 |
Data as of: 2026-01-31 |
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