What Is The Cooper Companies, Inc.'s (NYSE:COO) Share Price Doing?

The Cooper Companies, Inc. (NYSE:COO) received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$412 at one point, and dropping to the lows of US$372. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Cooper Companies' current trading price of US$394 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Cooper Companies’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Cooper Companies

What's the opportunity in Cooper Companies?

Great news for investors – Cooper Companies is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Cooper Companies’s ratio of 8.61x is below its peer average of 56.91x, which indicates the stock is trading at a lower price compared to the Medical Equipment industry. Another thing to keep in mind is that Cooper Companies’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its industry peers, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

What kind of growth will Cooper Companies generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Cooper Companies, at least in the near future.

What this means for you:

Are you a shareholder? Although COO is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to COO, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on COO for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you'd like to know more about Cooper Companies as a business, it's important to be aware of any risks it's facing. To that end, you should learn about the 3 warning signs we've spotted with Cooper Companies (including 2 which don't sit too well with us).

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This article by Simply Wall St is general in nature. 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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