The Cooper Companies Inc.
), a company operating in the contact lens and women's health
markets, hit a new 52-week high of $124.08 before closing at
$122.80 on Jun 17, 2013. This contact lens major's shares have
increased 8.5% since it reported favorable earnings results on
Drivers that Triggered Momentum
A positive fiscal second quarter 2013 earnings surprise along
with a favorable outlook for the contact lens industry
facilitated the shares of Cooper to gather momentum and achieve a
Cooper reported second-quarter fiscal 2013 (ended Apr 30)
adjusted earnings per share of $1.50 beating the Zacks Consensus
Estimate of $1.37 and the year-ago earnings of $1.12 per share.
Cooper's revenues in the fiscal second quarter increased 11% (up
15% in constant currency) year over year to $384 million, missing
the Zacks Consensus Estimate of $390 million. Growth was led by
robust sales of fertility offerings from CooperSurgical and
higher revenues from CooperVision.
The outlook for the contact lens industry is favorable. Trade
up to value added lenses, such as silicone hydrogel or one-day
lenses, constitutes a major avenue for growth. A trade up to
1-day disposable lenses sharply increases per user sales and
profit. The company has grown sales at higher-than-market growth
Key Indicators of the Stock
Cooper currently trades at a forward P/E multiple of 19.8x,
reflecting a discount to the peer group average of 20.7x. Its
price-to-book (P/B) multiple of 2.5 is at a small discount to the
peer group average of 2.65.
At the same time, the company is more efficient with deploying
assets and investments than its peers, which acts as a positive
factor for growth. It has a 12-month trailing ROA and ROI of 9.5%
and 10.8%, which is above the peer group average of 7.4% and
About the Company
Cooper earns about 80% of its revenues from its contact lens
operations with the balance coming from the smaller women's
health segment. Cooper is a leader in the high-margin toric lens
Cooper faces formidable competition in each of its major
product lines. Competition comes from well established global
contact lens makers. Depressed levels of consumer spending have
heightened the company's competitive pressures.
The stock currently carries a Zacks Rank #2 (Buy). We are also
Becton, Dickinson and Company
) each of which carries a Zacks Rank #2 (Buy) and are
expected to do well.
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