Technology

Cooper Cos. (COO) Up 5.1% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Cooper Cos. (COO). Shares have added about 5.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Cooper Cos. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Cooper Companies' (COO) Q1 Earnings Beat, FY19 Guidance Solid

The Cooper Companies reported first-quarter fiscal 2019 adjusted earnings of $2.88 per share, which surpassed the Zacks Consensus Estimate of $2.51. The bottom line also increased 3% on a year-over-year basis.

Revenues came in at $628.1 million, outpacing the Zacks Consensus Estimate of $618 million. On a year-over-year basis, the top line improved 6.5%.

Q4 Segment Details

CooperVision (CVI)

This segment garnered revenues worth $470.1 million, up 8% on a pro-forma basis and 6% on a reported basis.

Per management, the segment saw a noticeable uptick in the Single-use sphere lenses (28% of CVI), reflecting pro-forma growth of 17% driven by accelerating growth in both Clariti and MyDay. Single-use sphere lenses revenues totaled $132.1 million.

Toric (31% of CVI) revenues totaled $146 million, up 9% on a pro-forma basis.

Multifocal (10% of CVI) generated revenues worth $49.1 million, up 8% at pro forma and 5% year over year.

Non single-usesphere (30% of CVI) revenues came in at $142.9 million, up 1% at pro forma and down 1% from a year ago.

Geographically, the segment witnessed an improvement in revenues in the Americas (38% of CVI), up 4% at pro forma and 4% year over year to $176 million.

The EMEA revenues (39% of CVI) totaled $184.3 million, up 9% at pro forma and 4% from the prior-year quarter tally. Per management, overseas growth was driven by clariti and MyDay strength, and solid results from Biofinity and Avaira Vitality.

Asia Pacific sales (23% of CVI) rose 13% at pro forma and 12% year over year to $109.8 million.

CooperSurgical (CSI)

This segment posted revenues of $158 million, up 8% at pro forma and 9% year over year. Per management, the upside can be attributed to a 20% rise in PARAGARD.

Sub-segment Office and Surgical products (61% of CSI) accounted for $95.7 million revenues, up 7% at pro forma and 9% on a year-over-year basis.

Fertility (39% of CSI) posted revenues worth $62.3 million, up 9% year over year and 8% at pro forma.

Margin Analysis

In the fiscal first quarter, gross profit totaled $418.5 million, up 12.8% year over year.  Gross margin was 67% of net revenues, up 400 basis points (bps) year over year.

On an adjusted basis, gross margin was 67%, down 100 bps year over year. The gross margin contraction was due to currency headwinds, partially offset by favorable product mix.

Adjusted operating income in the quarter summed $147.5 million, up 16.9% year over year. Adjusted operating margin was 23.5%, up 210 bps from the prior-year quarter. The company stated that the adjusted operating margin was 26% compared with 28% in the year-ago quarter. Company-wide investments in selling and marketing were the primary reason behind the downturn.

FY19 Guidance

Cooper Companies raised its fiscal 2019 guidance. The company expects adjusted revenues in the $2.63-$2.68 billion band compared with $2.60-$2.66 billion projected earlier. The mid-point of the current range of $2.65 billion beats the Zacks Consensus Estimate of $2.64 billion. This represents year-over-year growth in the band of 6-7% on a pro-forma basis.

Cooper Companies expects adjusted earnings per share in the $11.85-$12.15 band compared with the previous guidance of $11.30-$11.70. The mid-point of $12 beats the Zacks Consensus Estimate of $11.56.

Notably, revenues from CVI are expected between $1,968 and $$1,995 million, higher than $1,940 million and $1,980 million anticipated earlier. This represents year-over-year growth in the 3-6% band on a pro-forma basis.

Revenues from CSI are anticipated within $663-$681 million, up from the previous guidance of $660-$680 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Cooper Cos. has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cooper Cos. has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


Click to get this free report

The Cooper Companies, Inc. (COO): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Technology Videos

Sundar Pichai's Google Move Will Increase Visibility, Techonomy's Kirkpatrick Says

David Kirkpatrick, chief executive officer and founder of Techonomy Media, discusses the decision by Google founders Larry Page and Sergey Brin to make Sundar Pichai chief executive officer of both Google and its holding company Alphabet Inc.

3 days ago