A month has gone by since the last earnings report for Cooper Cos. (COO - Free Report) . Shares have lost about 11.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Cooper Cos. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Cooper Companies Q4 Earnings Miss, Gains From Core CVI
Cooper Companies reported fourth-quarter fiscal 2018 earnings of $2.87 per share, missing the Zacks Consensus Estimate by 3%. However, earnings increased 8.3% on a year-over-year basis.
The company reported revenues worth $651.5 million, surpassing the Zacks Consensus Estimate of $645.8 million. On a year-over-year basis, revenues improved 16%.
Q4 Segment Details
This segment garnered revenues worth $480.6 million, up 10% on a pro forma basis and 9% year over year. Per management, the segment saw a noticeable uptick in the daily silicone hydrogel lenses, showing pro forma growth of 50% driven by accelerating growth in both Clariti and MyDay.
Toric (31% of CVI) revenues totaled $149.2 million, up 11% on a pro forma basis and 10% year over year. Multifocal (10%) generated revenues worth $47.8 million, up 7% at pro forma and 6% year over year.
Single-use sphere (29%) posted revenues worth $141.7 million, which shot up 21% at pro forma and 19% from a year ago. Non single-use sphere (30%) revenues came in at $141.9 million, up 2% at pro forma and 2% from a year ago.
Geographically, the segment saw an improvement in U.S. revenues (39%), up 8% at pro forma and 8% year over year to $185.8 million. EMEA revenues (38%) were $183.8 million, up 9% at pro forma and 6% from the prior-year quarter. Per management, overseas growth was driven by clariti and MyDay strength and strong results from Biofinity and Avaira Vitality.
Asia Pacific sales (23%) rose 19% at pro forma and 19% year over year to $111 million. Per management, APAC posted strong results buoyed by Clariti along with strength in MyDay and Biofinity.
This segment posted revenues of $170.9 million, up 5% at pro forma and 40% year over year. Per management, growth was led by a 20% rise in PARAGARD.
Sub-segment Office and Surgical products (64% of CSI) accounted for $110 million, up 12% at pro forma and a whopping 97% on a year-over-year basis. Fertility (36%) posted sales worth $60.9 million, down 9% year over year and 6% at pro forma.
In the fiscal fourth quarter, gross profit totaled $430 million, up 21.7% year over year. Per management, adjusted gross margin was 66%, flat with the year-ago quarter level. As a percentage of revenues, adjusted gross margin at the CSI segment was 73%, up from 60% a year ago. Per management, the upside was driven by the addition of PARAGARD and improvement in product mix. As a percentage of revenues, adjusted gross margin at the CVI segment was 64% compared with 68% in the year-ago quarter.
Operating income in the quarter totaled $122.7 million, up 13.1% year over year. Adjusted operating margin was 24.3%, up 180 bps from the prior-year quarter. Per management adjusted operating margin was 27%, flat year over year.
Cooper Companies exited the fiscal fourth quarter with free cash flow of $193.2 million, up 16% year over year.
The company’s debt fell to $2.02 billion primarily due to paydown with operational cash flow generation.
Cooper Companies expects fiscal 2019 revenues within $2,600-$2,660 million. The Zacks Consensus Estimate is pegged at $2.67 billion, above the projected range.
Notably, revenues from CVI are expected between $1,940 million and $1,980 million, while the same from CSI are anticipated within $660-$680 million.
The company also expects adjusted earnings per share between $11.30 and $11.70.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -7.81% due to these changes.
At this time, Cooper Cos. has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Cooper Cos. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.