Coloplast (CPSE:COLO B): Evaluating Valuation After Mixed Earnings, New Guidance, and Dividend Increase

Coloplast (CPSE:COLO B) just released its annual results, revealing a modest increase in sales but a drop in net income compared to last year. The company also announced updated guidance and a higher year-end dividend, which has caught investors' attention.

See our latest analysis for Coloplast.

After a year marked by mixed earnings, Coloplast’s share price has lost considerable ground, with a year-to-date return of -23% and a total shareholder return of -32% over the past 12 months. Despite the higher dividend and fresh growth guidance, momentum is still fading, and recent gains have not offset earlier declines. This highlights lingering concerns about profitability and future growth.

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With Coloplast shares trading well below last year’s levels, but analysts still seeing upside from here, the question now is whether the market is undervaluing the stock or already factoring in all future growth prospects.

Most Popular Narrative: 12% Undervalued

Coloplast’s most widely followed valuation narrative sets its fair value at about DKK 686, compared to a last close around DKK 603. This positions the stock as attractively priced relative to future growth assumptions and anticipated margin expansion, according to market consensus. The key driver of this valuation is the company’s innovation strategy and sustained development within core markets.

The ongoing reorganization into distinct Chronic Care and Acute Care units, with a dedicated R&D function for Chronic Care, is designed to accelerate innovation cycles and improve time-to-market for new products. This approach is expected to drive higher revenue and operating margins by leveraging user-focused innovation and maximizing manufacturing efficiency.

Read the complete narrative.

Curious which groundbreaking launches and bold profit projections might power Coloplast’s next big move? The narrative’s fair value rests on more than optimism. Its future hinges on ambitious targets and a transformation few competitors attempt. Want to see what those game-changing assumptions look like?

Result: Fair Value of DKK 686 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, execution missteps or regulatory setbacks in key regions could quickly undermine these optimistic growth assumptions. As a result, downside risk is hard to ignore.

Find out about the key risks to this Coloplast narrative.

Another View: The Multiples Perspective

While Coloplast looks undervalued using a fair value model, the market tells a different story when comparing price-to-earnings. Coloplast’s ratio is 37.4x, notably higher than both the industry average (28.1x) and peer average (29.2x), and slightly below its fair ratio of 39x. This premium raises important questions. Is the market overestimating Coloplast’s near-term potential, or is there hidden quality that justifies paying up?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Coloplast Narrative

Not convinced by these viewpoints, or do you want to dig deeper on your own terms? You can shape your own story in minutes with Do it your way.

A great starting point for your Coloplast research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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