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Category: Stock Market and CooperCompanies
Date: 2 September 2019 Stock Price: $309.79 We take a look at the 3rd quarter earnings for the 2019 fiscal year for CooperCompanies, the medical device company.
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About CooperCompanies
CooperCompanies is a dynamic, innovative medical device company whose more than 12,000 employees improve lives around the world each and every day. Through our two business units - CooperVision and CooperSurgical – we provide a wide range of products and services designed to advance vision care and women's health. CooperVision is a world-leading manufacturer of contact lenses that addresses the most common and complex vision challenges, bringing a refreshing perspective that delivers real advantages for customers and wearers. CooperSurgical is committed to advancing the health of women, babies and families with its diversified portfolio of products and services focusing on women’s health, fertility and diagnostics.
Financial overview of CooperCompanies' latest earnings report
Numbers highlighted by management:
The numbers we are interested in (for the quarter):
- Revenue $679.4 million up 3% from last year’s third quarter, up 5% pro forma.
- Gross margin 66% compared with 65% in last year’s third quarter. On a non-GAAP basis, gross margin was 67%, the same as last year's third quarter.
- Operating margin 21% compared with 18% in last year’s third quarter as a result of operating expense leverage. On a non-GAAP basis, operating margin was 28%, the same as last year's third quarter.
- Interest expense $16.7 million compared with $22.8 million in last year's third quarter primarily due to lower average debt.
- Total debt outstanding at the end of the quarter was $1,812.6 million. The Company ended the quarter with cash and cash equivalents of $112.7 million and an adjusted leverage ratio (net debt over adjusted EBITDA) of 1.83 times.
- Cash provided by operations $196.7 million offset by capital expenditures $75.4 million resulted in free cash flow of $121.3 million.
The numbers we are interested in (for the quarter):
- Revenue $679.4 million
- Cost of sales $228.7 million
- Diluted earnings per share: $2.40
- PE ratio: 368
- Diluted number of shares outstanding: 50.1 million
- Cash and cash equivalents$112.7 million
- Cash and cash equivalents per share: $2.24
- Cash and cash equivalents makes up 1.8% of the group's total assets
- Trade receivables, net: $404.7 million
- Trade receivables, net makes up 6.56% of the group's total assets
- Inventories: $502.1 million
- Inventories makes up 8.13% of the group's total assets
- Cash generated from operations: $196.7 million
- Cash generated from operations per share: $3.92
- Stockholders equity: $3.615 billion
- Stockholders equity per share: $72.30
CooperCompanies' management commentary on the results and earnings guidance
PLEASANTON, Calif., Aug. 29, 2019 (GLOBE NEWSWIRE) -- CooperCompanies (NYSE: COO) today announced financial results for the fiscal third quarter ended July 31, 2019.
Commenting on the results, Albert White, Cooper’s president and chief executive officer said, "I am pleased to report another strong quarter for the company with solid revenues and earnings. These results were driven by our market leading products and strong operational execution. Our businesses continue to perform well and we believe we are well positioned to continue posting strong results."
Fiscal Year 2019 Guidance
The Company updated its fiscal year 2019 guidance. Details are summarized as follows:
- Revenue increased 3% year-over-year to $679.4 million. CooperVision (CVI) revenue up 4% to $509.1 million, and CooperSurgical (CSI) revenue consistent with last year at $170.3 million.
- GAAP diluted earnings per share $2.40, up 18.1% from last year's third quarter.
- Non-GAAP diluted earnings per share $3.23, up 23 cents or 7.8% from last year’s third quarter. See “Reconciliation of GAAP Results to Non-GAAP Results” below.
Commenting on the results, Albert White, Cooper’s president and chief executive officer said, "I am pleased to report another strong quarter for the company with solid revenues and earnings. These results were driven by our market leading products and strong operational execution. Our businesses continue to perform well and we believe we are well positioned to continue posting strong results."
Fiscal Year 2019 Guidance
The Company updated its fiscal year 2019 guidance. Details are summarized as follows:
- Fiscal 2019 total revenue $2,635 - $2,655 million (6% to 7% pro forma)
- CVI revenue $1,966 - $1,976 million (7% to 8% pro forma)
- CSI revenue $669 - $679 million (4% to 6% pro forma) - Fiscal 2019 non-GAAP diluted earnings per share of $12.27 - $12.35
- Fiscal fourth quarter 2019 total revenue $674 - $694 million (5% to 8% pro forma)
- CVI revenue $503 - $513 million (6% to 8% pro forma)
- CSI revenue $171 - $181 million (1% to 7% pro forma) - Fiscal fourth quarter 2019 non-GAAP diluted earnings per share $3.22 - $3.30
CooperCompanies (NYSE: COO) stock price history
The image below, obtained from Google, shows CooperCompanies stock price history for the last 5 years. And its been a good time for stockholders with the group's stock increasing from $161 a share 5 years ago to trading at $309.75 right now. Thats over 90% return over the last 5 years.
CooperCompanies (NYSE: COO) latest stock valuation
So based on the group's latest earnings report and financial guidance for the rest of the fiscal year, what is our target price for CooperCompanies? Our valuation models provide a target price (full value price) for CooperCompanies stock of $273.50 a stock. We therefore believe the stock is overvalued when looking at it from a fundamental value investment point of view. We would not recommend buying at its current price and would only recommend investors look to enter the stock at around 10% below our full value price of $273.50 a stock. So closer to the $250 a stock mark would we look at entering CooperCompanies