The Cooper Companies, Inc.

Based on the provided technical, fundamental, valuation, and risk analysis, here is a comprehensive analysis of COO.

Technical Analysis COO shows resilience, having recovered significantly from its low and outperforming the market over the last quarter. However, its momentum has stalled recently, trading sideways and consolidating near the middle of its 52-week range. This suggests a period of equilibrium, with the stock neither strongly overbought nor oversold at its current level.

Fundamental Analysis The company's fundamentals present a mixed picture. While revenue is stable and the balance sheet is conservative with low debt, profitability is under pressure from compressed margins. Operational efficiency is a concern, highlighted by a very long cash conversion cycle that indicates capital is tied up in inventory for extended periods.

Valuation Valuation is a significant red flag. COO's current PE and forward PE ratios are exceptionally high, and the negative PEG ratio suggests earnings growth is not expected to justify this premium. The elevated EV/EBITDA multiple further indicates the stock is priced for near-perfect execution, which appears disconnected from its current financial trajectory.

Risk Assessment The risks are balanced. COO's volatility is in line with the market, but its history of a deep drawdown shows it can experience sharp declines. The lack of short interest removes a source of bearish pressure but also means there isn't a consensus view betting on a catalyst for a price increase.

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**Recommendation: HOLD**

COO is not recommended as a buy at this time. While the company has a stable revenue base and a healthy balance sheet, these strengths are overshadowed by deteriorating profitability and a valuation that appears unjustifiably high. Investors should wait for clear signs of margin improvement or a more reasonable entry point before considering a position. The current price seems to anticipate a strong recovery that the fundamentals have yet to demonstrate.

RockFlow Model Forecast: Three Scenarios for 2026

Based on the comprehensive analysis, here is a 12-month outlook for COO (The Cooper Companies):

The primary catalyst for a positive re-rating over the next year hinges on the company demonstrating meaningful improvement in its operational efficiency and profit margins, which would help justify its premium valuation. The stable revenue base and conservative balance sheet provide a foundation for this potential recovery. Key risks are predominant, including the stretched valuation multiples that leave little room for error and the persistent operational challenges, particularly the lengthy cash conversion cycle, which could continue to pressure earnings. Given the lack of a clear catalyst against a backdrop of high expectations, the stock is likely to remain range-bound, with a target range centered around the current price in the low-$80s, until there is tangible evidence of fundamental improvement.

Wall Street Consensus

Most Wall Street analysts are optimistic about The Cooper Companies, Inc.'s 12-month outlook, with consensus target around $83.68, indicating expected upside potential.

Overall, COO has investment potential but also faces challenges. Here are key factors to weigh before investing.

COO has demonstrated mixed performance with notable quarterly gains offset by recent stagnation. The stock sits comfortably above its midpoint in the 52-week range after a significant recovery from its annual low, though it remains below recent highs.

Short-term performance shows consolidation, with COO essentially flat over the past month but posting strong 13.59% gains over three months. This quarterly performance significantly outperformed the broader market by 13.13%, indicating relative strength despite recent sideways movement.

Currently trading at approximately 73% of its 52-week range, COO appears fairly valued with neither strongly overbought nor oversold characteristics. The stock maintains a beta near 1, suggesting market-average volatility, while the substantial maximum drawdown highlights the recovery required to reach current levels.

Revenue & Profitability: COO's Q4 revenue showed marginal growth to $1.07 billion from $1.06 billion in Q3, but profitability weakened significantly with net margin dropping to 7.9% from 9.3%. This compression stemmed from gross margin erosion from 65.3% to 56.4%, partially offset by stable operating expenses as a percentage of revenue.

Financial Health: The company maintains a conservative debt structure with a debt-to-equity ratio of 0.34 and interest coverage of 5.8x, indicating manageable leverage. However, cash flow coverage ratios are modest at 0.09, suggesting limited capacity for additional debt servicing despite solid liquidity with a current ratio of 1.89.

Operational Efficiency: Operational metrics reveal challenges with low asset turnover of 0.09 and modest returns (ROE of 1.0%, ROA of 0.7%). The extended cash conversion cycle of 176 days, driven by high inventory days outstanding of 164, indicates capital-intensive operations requiring improvement in working capital management.

Based on COO's current PE ratio of 69.09, the stock appears significantly overvalued on a trailing earnings basis. The forward PE of 40.93 suggests some expectation of earnings growth but remains at a high level, which is not supported by the negative PEG ratio of -3.34, indicating that growth expectations may be negative or that earnings are declining. The elevated EV/EBITDA of 76.78 further confirms a premium valuation that seems difficult to justify without exceptionally strong future performance.

A direct peer comparison using industry averages is not possible as the data is unavailable. The valuation must therefore be assessed on its absolute merits, which, based on the high multiples across all metrics presented, points to a stock trading at a substantial premium. Without industry context, it is challenging to determine if this premium is sector-typical or company-specific, but the metrics suggest caution.

Volatility Risk: COO exhibits market-like volatility with a beta of 1.027, indicating its price movements are generally in line with the broader market. However, the stock carries significant downside risk, as evidenced by its substantial one-year maximum drawdown of -29.82%, which highlights potential for considerable losses during market downturns.

Other Risks: A notable observation is the absence of reported short interest, which suggests a lack of significant bearish sentiment from sophisticated investors but also removes a potential source of market liquidity. Furthermore, the lack of short selling could indicate limited trading controversy but may also mask underlying stability risks not being actively bet against.