Investment Thesis
Cooper Companies maintains a fundamentally sound business with strong gross margins (67.9%) and solid free cash flow generation ($255.1M), supported by conservative debt management (0.23x debt/equity). However, deteriorating profitability—net income declining 4.4% YoY despite 5.1% revenue growth—reveals operational efficiency challenges, compounded by critically weak capital returns (0.6% ROE, 0.4% ROA) and liquidity pressures (0.78x quick ratio).
Strengths
- Robust gross margin of 67.9% demonstrates strong pricing power and product-market position in ophthalmic sector
- Solid free cash flow generation of $255.1M with 12.1% FCF margin indicates effective cash conversion despite profitability compression
- Conservative capital structure with debt-to-equity ratio of 0.23x and interest coverage of 3.1x provides financial stability
Risks
- Declining net income (-4.4% YoY) and EPS (-4.6% YoY) despite revenue growth signals serious profitability deterioration and operational inefficiency
- Exceptionally low net margin (2.5%) and returns on capital (0.6% ROE, 0.4% ROA) with 65.4pp gap between gross and net margins indicate unsustainable cost structure
- Liquidity constraints with quick ratio of 0.78x below 1.0 and minimal cash position of $138.8M create financial inflexibility
Key Metrics to Watch
- Operating margin and SG&A expense ratio—critical to determine if profitability compression is structural or cyclical
- Net income trajectory—must stabilize and inflect positive to justify holding position
- Working capital and free cash flow sustainability—essential given below-1.0 quick ratio and tight cash position
Financial Metrics
Revenue
2.1B
Net Income
52.9M
EPS (Diluted)
$0.27
Free Cash Flow
255.1M
Total Assets
12.5B
Cash
138.8M
Profitability Ratios
Gross Margin
67.9%
Operating Margin
8.6%
Net Margin
2.5%
ROE
0.6%
ROA
0.4%
FCF Margin
12.1%
Balance Sheet & Liquidity
Current Ratio
1.27x
Quick Ratio
0.78x
Debt/Equity
0.23x
Debt/Assets
34.0%
Interest Coverage
3.09x
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: 2026-06-06T07:47:08.654788 |
Data as of: 2026-04-30 |
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