A Look at Cooper Companies’s Valuation Following Expanded $2 Billion Share Buyback (COO)

If you are deciding what to do with Cooper Companies (COO) after this week’s move, you are not alone. The company just announced a major change in its capital allocation strategy: a $1 billion boost to its ongoing share buyback plan, doubling the total authorization to $2 billion. This fresh commitment to repurchasing shares signals to the market that leadership has confidence in Cooper Companies' financial position and future trajectory.

This announcement was met with a 3.6% rise in share price, suggesting investors welcomed the news as a show of faith from management. Still, that bounce comes against a backdrop where performance has lagged. Shares are down 25% so far this year and have lost 38% over the past twelve months. While annual revenue and net income have posted healthy growth, recent momentum in the stock itself has been subdued, with the longer-term trend flat to negative.

So, with buybacks ramping up and management openly signaling belief in the company’s outlook, is now the moment to grab shares at a bargain, or has the market already factored in all future growth?

Most Popular Narrative: 19% Undervalued

According to the most widely followed narrative, Cooper Companies currently trades well below estimated fair value. This narrative highlights a substantial discount, reflecting expectations for future growth and improved profitability.

Investments in automation, digital solutions, and integration of recent acquisitions (notably in CooperSurgical and the fertility segment) are coming to fruition, leading to expected operating efficiencies, working capital improvements, and operating margin expansion. These factors are seen as supporting higher future earnings and better free cash flow conversion.

What is driving that big gap between current price and fair value? This narrative hints at a game-changing shift, with a mix of margin expansion, revenue acceleration, and bold financial projections. Want the full breakdown of how future growth and profitability could shake up the valuation? The specifics behind these assumptions might surprise you.

Result: Fair Value of $84.47 (UNDERVALUED)

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

However, competitive pricing pressure in Asia and unpredictable order patterns during the transition to MyDAY could undermine revenue growth and margin improvement.

Find out about the key risks to this Cooper Companies narrative.

Another View: The Market Multiple Perspective

While the main view finds Cooper Companies undervalued, a look through the lens of its current price-to-earnings ratio shows a different story. By this measure, Cooper actually appears more expensive than its industry peers. Could the market be pricing in too much optimism, or is the gap justifiable?

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

Stay updated when valuation signals shift by adding Cooper Companies to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Cooper Companies Narrative

If the analysis above does not align with your perspective or you want to dig into the numbers yourself, it's easy to craft your own narrative in just a few minutes. Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Cooper Companies.

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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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