Has the Recent Cooper Companies Share Price Rebound Created a Long Term Opportunity?

• If you are wondering whether Cooper Companies is a quiet bargain or a value trap at today’s price, you are in the right place. We are going to unpack what the market might be missing.
• The stock has bounced recently, up about 4.5% over the last week and 16.1% over the past month. That is against a backdrop of a weaker year, with returns of -10.2% year to date and -17.5% over the last 12 months.
• Recent moves have been shaped by shifting sentiment around medical device and vision care demand, as investors weigh long-term structural tailwinds such as aging populations against short-term macro uncertainty. Sector-wide rotations in healthcare, along with fluctuating expectations for elective procedure volumes, have also added some volatility to Cooper Companies share price.
• Right now, Cooper Companies scores just 1/6 on our valuation checks. This suggests the stock does not appear clearly undervalued on the surface. However, headline scores do not always tell the full story, so next we will walk through the key valuation approaches and then circle back to a more holistic way of thinking about fair value that ties everything together.

Cooper Companies scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Cooper Companies Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model takes the cash Cooper Companies is expected to generate in the future, then discounts those projections back into today’s dollars to estimate what the business is worth now.

Cooper Companies currently generates about $406.5 Million in Free Cash Flow, and analysts expect this to grow steadily over time. External estimates cover the next few years, with Simply Wall St extrapolating beyond that to arrive at projected Free Cash Flow of roughly $1.24 Billion by 2035. These annual cash flows are discounted using a 2 Stage Free Cash Flow to Equity approach, which reflects higher growth in the near term that gradually tapers as the business matures.

On this basis, the DCF model arrives at an intrinsic value of about $93.67 per share. Compared with the current share price, this implies Cooper Companies trades at roughly a 13.1% discount, which suggests the market is pricing in more pessimism than the cash flow outlook warrants.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Cooper Companies is undervalued by 13.1%. Track this in your watchlist or portfolio, or discover 907 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Cooper Companies.

Approach 2: Cooper Companies Price vs Earnings

For a profitable, established business like Cooper Companies, the price to earnings, or PE, ratio is a practical way to gauge how much investors are willing to pay today for each dollar of current earnings. In general, faster growing and lower risk companies deserve higher PE ratios, while slower growth or higher uncertainty usually calls for a lower, more conservative multiple.

Cooper Companies currently trades at about 42.55x earnings, which is well above both the Medical Equipment industry average of roughly 29.16x and the broader peer average of about 26.17x. On the surface that premium suggests the market is baking in stronger growth or lower perceived risk than for typical sector peers.

Simply Wall St also estimates a proprietary Fair Ratio of around 31.69x for Cooper Companies. This is the PE level you might expect given its specific mix of earnings growth, profitability, industry positioning, size and risk profile. This Fair Ratio is more tailored than a simple comparison against peers or the industry, because it adjusts for the company’s own fundamentals rather than assuming all medical equipment names should trade alike. Comparing the current 42.55x PE to the 31.69x Fair Ratio points to Cooper Companies looking meaningfully overvalued on this metric.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1452 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Cooper Companies Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. These are simple stories that you and other investors create about Cooper Companies that link your view of its products, competitive position and industry outlook to specific forecasts for revenue, earnings and margins, and ultimately to your own estimate of fair value on Simply Wall St’s Community page, where millions of investors share and refine their views.

Instead of only accepting a single DCF or PE number, a Narrative lets you say why you think, for example, Cooper’s premium contact lens rollout, automation benefits and buybacks justify a Fair Value near the higher end of current user views, around $96 per share. Alternatively, you might feel that rising competition, slower market growth and surgical headwinds support a much more cautious Fair Value closer to $66. You can then compare that Fair Value to today’s share price to decide whether the stock looks like a buy, hold or sell.

Because Narratives on the platform are updated dynamically as new earnings, guidance or news on things like activist campaigns and buyback authorizations come in, your story and its Fair Value evolve automatically. This can help you stay aligned with the latest information without having to rebuild your analysis from scratch each time.

Do you think there's more to the story for Cooper Companies? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com