We’re diving into The Cooper Companies, Inc. (COO) latest earnings report, and it’s a mixed bag that demands our attention. While the company delivered solid revenue growth, topping analyst expectations, its earnings per share fell significantly short of what Wall Street was anticipating.
This tells us a story of robust top-line performance, likely driven by strong demand for its medical products, yet challenges remain on the profitability front. As your trusted analyst, we’ll break down what these results mean for your investment in COO and what you should watch next.
What Happened This Quarter: The Big Picture
Here’s what you need to know about Cooper Companies’ third fiscal quarter of 2025. The company reported over $1 billion in revenue, showing healthy year-over-year growth, which is a positive sign for its core businesses in contact lenses and women’s health.
However, the headline number that caught our eye was the significant miss on earnings per share. COO reported an EPS of $2.04, which was half of the $4.08 analysts expected, raising questions about cost management and operational efficiency.
Despite this earnings miss, the underlying business appears to be generating strong cash flow, which is crucial for funding future growth and managing its debt load. We believe investors should focus on the balance between revenue momentum and profitability pressures in the coming quarters.
Breaking Down the Financial Results
Now let’s walk through the numbers together. Here’s what the results tell us about COO’s financial health and performance.
Revenue: Where the Money Came From
Cooper Companies reported total revenue of $1.06 billion for the quarter, marking a healthy 5.7% increase compared to the same period last year. This growth suggests continued demand for its specialized healthcare products and services.
While specific analyst dollar estimates for this quarter’s revenue aren’t clearly comparable in the provided data, this 5.7% growth is a positive indicator for the top line. We see this as a testament to the strength of its CooperVision and CooperSurgical segments, driving consistent sales.
Profit and Margins: Is the Company Making Money Efficiently?
This is where the picture gets a bit more complex. COO’s gross profit stood at $692 million, translating to a strong gross margin of 65.26%, indicating efficient production and pricing power. Operating income was $175.7 million, with an operating margin of 16.57%, which is solid for the industry.
However, the net income of $98.3 million resulted in diluted earnings per share (EPS) of $2.04. This fell significantly short of the analyst consensus estimate of $4.08, representing a 50% surprise to the downside. The miss suggests that while sales are growing, higher operating expenses, interest costs, or tax provisions may have eroded profitability more than anticipated.
Cash and Debt: Financial Health Check
Assessing the balance sheet, Cooper Companies holds $124.9 million in cash and equivalents. This cash position is relatively modest compared to its total assets of $12.38 billion.
The company carries a long-term debt of approximately $2.43 billion, contributing to a total debt of nearly $2.48 billion. With a debt-to-equity ratio of 29.67% and a current ratio of 2.12, we consider the company’s debt manageable, especially given its strong operating cash flow.
Cash Flow: Follow the Money
Cash flow from operations was robust this quarter, reaching $261.4 million. After accounting for capital expenditures of $96.9 million, the company generated an impressive $164.5 million in free cash flow.
This strong cash generation is a positive sign, indicating that COO can fund its growth initiatives and manage its financial obligations without excessive reliance on external financing. The company also allocated $52.7 million towards share repurchases, returning value to shareholders.
Comparing to Last Year: Growth Trends
Let’s put this quarter’s performance in context by comparing it to the same period last year. This helps us understand the underlying growth trends for Cooper Companies.
| Metric | This Quarter (Q3 2025) | Last Year (Q3 2024 Est.) | Change | What It Means |
|---|---|---|---|---|
| Revenue | $1.06 Billion | ~$1.00 Billion | +5.7% | Steady top-line expansion, good demand. |
| EPS Diluted | $2.04 | $2.04 | 0.0% | Profitability held flat year-over-year despite revenue growth, concerning for efficiency. |
Revenue growth of 5.7% is a solid performance, suggesting the company is effectively expanding its market reach and product adoption. However, the flat year-over-year diluted EPS indicates that this revenue growth isn’t fully translating into increased per-share profitability, which is a key area for investors to monitor.
Quarter-to-Quarter Momentum
While we don’t have explicit quarter-over-quarter data in the provided information, the 5.7% year-over-year revenue growth points to continued positive momentum in the business. This suggests that demand for COO’s products and services is holding steady or slightly accelerating.
However, the significant EPS miss introduces a note of caution regarding short-term profitability trends. We’ll need to watch if this is an isolated event or if operating expenses are becoming a persistent challenge that could impact future quarters.
Business Segments: What’s Working and What’s Not
The Cooper Companies operates through two primary segments: CooperVision and CooperSurgical. Understanding these distinct businesses helps us appreciate the drivers behind the overall results.
CooperVision: Eye Care Innovation
This segment focuses on contact lenses, offering a wide range of products including toric lenses for astigmatism, multifocal lenses for presbyopia, and spherical lenses. CooperVision typically benefits from recurring revenue as consumers consistently need replacement lenses.
We believe this segment likely contributed significantly to the overall revenue growth, driven by innovation in specialized lenses and strong global distribution. Its stable nature provides a reliable base for the company’s top line.
CooperSurgical: Women’s and Family Health
CooperSurgical is dedicated to women’s health, fertility products, and medical devices. This segment includes fertility consumables, genetic testing, and surgical products like contraceptive intrauterine devices.
This area often presents higher growth opportunities due to advancements in medical technology and increasing demand for fertility services. While we don’t have specific segment numbers, we expect this segment to be a key driver for future expansion, albeit with potential exposure to broader healthcare policy and competition.
What Management Is Saying: Forward Guidance
Unfortunately, explicit forward guidance on earnings per share or revenue for upcoming periods was not immediately available in the provided earnings data. This lack of specific numerical guidance can sometimes make it harder for investors to model future performance with precision.
However, we can infer that management is likely focused on leveraging the strong demand seen in both segments while addressing the profitability challenges highlighted by the EPS miss. We anticipate management will emphasize operational efficiencies and strategic investments in their upcoming communications.
What Wall Street Thinks: Analyst Views
Despite the earnings per share miss, Wall Street analysts maintain a largely optimistic view on COO. Out of 17 analysts covering the stock, 11 recommend a “buy” and 7 suggest a “hold,” with only one “sell” rating.
The consensus target price for COO is $83.00, with a median target of $85.00. Considering the current stock price of $75.98, this implies a potential upside for investors, suggesting analysts believe the company’s long-term prospects outweigh the recent EPS disappointment. You can track their latest filings and reports on the company’s SEC 10-Q filings.
Valuation: Is the Stock Cheap or Expensive?
Let’s talk about the price you’re paying for this business. COO’s stock is currently trading at $75.98, which is well below its 52-week high of $104.47 but above its low of $61.78. Based on current market data from Yahoo Finance, the company’s market capitalization stands at over $15 billion.
The trailing P/E ratio is 37.25, which looks somewhat elevated, but the forward P/E drops significantly to 18.62. This suggests analysts expect a substantial improvement in future earnings. The price-to-sales ratio is 3.75 and price-to-book is 1.81.
Compared to the broader healthcare industry, especially medical instruments and supplies, these multiples can be considered reasonable for a company with consistent revenue growth and strong margins. We believe the forward P/E indicates that the stock might be fairly valued, or even a bargain, if it can deliver on future profit expectations.
My Bottom Line: What This Means for Investors
- Solid Top-Line Growth: Cooper Companies continues to demonstrate its ability to grow revenue, with a 5.7% increase driven by both its CooperVision and CooperSurgical segments. This shows healthy demand for its core products.
- Significant EPS Miss: The large miss on earnings per share, coming in at $2.04 against an estimate of $4.08, is a clear red flag that we need to monitor closely. It suggests operational costs or other financial factors are eroding profitability.
- Strong Cash Generation: Despite the EPS miss, the company generated robust operating cash flow of $261.4 million and free cash flow of $164.5 million. This financial strength provides flexibility for investment and debt management.
- Analyst Optimism Persists: Wall Street largely maintains a “buy” rating with a decent upside to price targets, indicating a belief in COO’s long-term fundamentals despite the quarterly earnings volatility. We share this cautious optimism, focusing on the underlying business strength.
- Overall Verdict: We view this quarter as a mixed but fundamentally sound report. The revenue growth and cash flow are positive, but the EPS miss demands scrutiny into the drivers of profitability. Investors should maintain a watchful eye on how management plans to improve bottom-line performance in the coming quarters.
Risks You Should Watch
Every investment comes with its share of risks, and COO is no exception. Here’s what we believe you should keep an eye on moving forward.
- Profitability Pressure: The significant EPS miss this quarter highlights a potential challenge in translating strong revenue into robust net income. Rising operating expenses or unforeseen costs could continue to impact the bottom line.
- High Debt Levels: While manageable, the company’s total debt of nearly $2.5 billion relative to its cash position could become a concern if interest rates rise significantly or if cash flow generation weakens. Investors should monitor the debt-to-equity ratio closely.
- Regulatory and Pricing Scrutiny: The CooperSurgical segment, particularly with its medical devices and fertility products, faces ongoing regulatory scrutiny and potential drug pricing pressures. Changes in healthcare policies could impact profitability and market access.
- Competition and Innovation: Both the contact lens and women’s health markets are highly competitive. COO needs to continuously innovate to maintain market share and pricing power against established and emerging rivals.
Despite these risks, Cooper Companies operates in essential and growing healthcare segments. The strong underlying demand and consistent cash flow generation provide a solid foundation, but investors must remain vigilant regarding profitability and market dynamics.
Frequently Asked Questions (FAQ)
Question 1: Why did COO’s EPS miss so badly despite revenue growth?
The significant miss on earnings per share, with $2.04 reported against an estimated $4.08, suggests that while the company’s top-line revenue is growing, its expenses are increasing at a faster rate or one-time charges impacted the quarter. Factors like higher operating expenses (sales, marketing, G&A), increased interest costs on debt, or a higher effective tax rate could have compressed net income more than analysts anticipated.
Question 2: What are the key growth drivers for Cooper Companies?
COO’s growth is primarily driven by its two segments: CooperVision and CooperSurgical. CooperVision benefits from the consistent demand for contact lenses and innovation in specialized lenses for various vision corrections. CooperSurgical, focused on women’s health and fertility, is propelled by advancements in medical devices, genetic testing, and increasing global demand for fertility services.
Question 3: Is COO’s debt level a concern for investors?
COO carries a total debt of nearly $2.5 billion, which gives it a debt-to-equity ratio of 29.67%. While this is a substantial amount, the company’s strong operating cash flow of $261.4 million this quarter indicates a healthy ability to service its debt. We consider the debt manageable, but it’s a metric to watch, especially if interest rates continue to climb.
Question 4: How does COO compare to its peers in terms of valuation?
COO’s current valuation metrics, such as a trailing P/E of 37.25 and a forward P/E of 18.62, position it within the typical range for the Medical Instruments & Supplies industry. The forward P/E, in particular, suggests that analysts expect substantial earnings improvement, making the stock appear more reasonably valued compared to its current trailing earnings.
Question 5: What’s the outlook for the stock given the mixed earnings results?
The outlook for COO is mixed but leans positive, according to our analysis and Wall Street consensus. While the EPS miss is a concern, the robust revenue growth and strong cash flow are fundamental positives. Analysts project an average target price of $83.00, implying potential upside from current levels. We believe the stock’s performance will depend on management’s ability to improve profitability while maintaining top-line momentum.
Question 6: What should investors watch for in COO’s next earnings report?
For the next report, investors should closely monitor several key areas. First, look for any explicit forward guidance from management on both revenue and EPS to assess their confidence in future performance. Second, pay attention to operating expenses and how they impact margins. Finally, keep an eye on segment performance, particularly for any specific growth drivers or challenges within CooperVision and CooperSurgical.
Question 7: Does Cooper Companies return capital to shareholders through dividends or buybacks?
While the provided data does not indicate any dividends paid this quarter, Cooper Companies did engage in share repurchases. The cash flow statement shows $52.7 million allocated to share repurchases. This is a common way for companies to return capital to shareholders and can help boost earnings per share by reducing the number of outstanding shares.