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Cooper Cos. (COO) Up 3% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Cooper Cos. (COO - Free Report) . Shares have added about 3% in that time frame, underperforming 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 drivers.

Cooper Companies Q4 Earnings Beat Estimates, Margins Expand

Cooper Companies reported fourth-quarter fiscal 2019 adjusted earnings per share of $3.30, which surpassed the Zacks Consensus Estimate of $3.27. The bottom line increased 15% on a year-over-year basis.

Revenues of the company came in at $691.6 million, beating the Zacks Consensus Estimate of $685.4 million. Also, on a year-over-year basis, the top line improved 6.2%.

Q4 Segment Details

CVI

This segment’s revenues totaled $509.6 million, up 6% on a pro-forma basis and 7% on a reported basis.

Per management, the segment saw a substantial uptick in revenues from Single-use sphere lenses (30% of CVI), reflecting pro-forma growth of 10% on accelerating growth in both Clariti and MyDay. Single-use sphere lenses revenues totaled $154.5 million.

Toric (31% of CVI) revenues totaled $155.7 million, up 6% on a pro-forma basis.

Multifocal (10% of CVI) generated revenues of $51.8 million, up 10% at pro forma.

Non single-use sphere (29% of CVI) revenues came in at $147.6 million, up 4% at pro forma and 4% from the year-ago quarter.

Geographically, the segment witnessed an improvement in revenues in the Americas (39% of CVI), up 6% at pro forma and 7% year over year to $199.4 million.

EMEA revenues (36% of CVI) totaled $185.1 million, up 5% at pro forma and 1% from the prior-year quarter.

Asia Pacific sales (25% of CVI) rose 11% at pro forma and 13% year over year to $125.1 million.

CSI

This segment posted revenues of $182.1 million, up 7% at pro forma and also year over year.

Sub-segment Office and Surgical products (63% of CSI) accounted for $114.7 million revenues, up 4% at pro forma and on a year-over-year basis.
Fertility (37% of CSI) revenues were $67.4 million, up 11% year over year and 12% at pro forma.

Margin Analysis

In the fiscal fourth quarter, gross profit was $455 million, up 5.8% year over year.  Gross margin was 65.8% of net revenues, down 20 basis points (bps) year over year.

On an adjusted basis, gross margin was 67%, up 100 bps year over year.

Operating income in the quarter totaled $146.6 million, up 19.5% year over year. Adjusted operating margin was 28%, up 100 bps from the prior-year quarter.

FY20 View

For fiscal 2020, Cooper expects revenues within $2,767-$2,817 million, suggesting 5-7% growth at constant currency (cc).

CVI revenues are expected between $2,070 million and $2,100 million (5.5-7% at cc).

CSI revenues are estimated in the range of $697-$717 million (3-6% at cc).
Adjusted EPS is projected within $12.60-$13.00.

Fiscal first quarter revenues are expected within $638 million to $653 million (2% to 5% at cc).

CVI revenues are projected in the range of $480 million to $490 million (3-5% at cc).

CSI revenues are anticipated in the band of $158 million to $163 million (flat to 4% at cc).

First-quarter adjusted EPS is expected between $2.65 and $2.75.

How Have Estimates Been Moving Since Then?

Estimates revision followed a downward path over the past two months. The consensus estimate has shifted -8.64% due to these changes.

VGM Scores

Currently, Cooper Cos. has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.

Outlook

Cooper Cos. has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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