The Cooper Companies, Inc. (COO): what the price assumes

In the published model solve dated 2026-Q2, anchored at $71.17, The Cooper Companies, Inc. (COO) is priced for today's economics sustained for ~5.7 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/COO

Headline

FieldValue
TickerCOO
CompanyThe Cooper Companies, Inc.
Sector / IndustryHealthcare
Current price$71.17/sh
CompositionCooperVision - Toric and multifocal 33% / CooperVision - Sphere, other 34% / CooperSurgical - Office and surgical 20% / CooperSurgical - Fertility 13%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin (value-band context)7.1%
Operating margin today11.8%
Margin compression (value-band)-4.7pp
Must persist for5.7y
Multiple paid33x operating income

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 8.7% cost of capital; growth searched up to the 25% self-funding ceiling.

How unusual the bet is: within-range (limited comparison data)

ReferenceValue
vs own history+0.63σ
cohort percentile (of 115 peers)75

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset7.33x4expensive
Earnings4.35x4expensive
Relative—0—
Growth1.03x3expensive

Families that justify the price: Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.0%); the inversion above states its own rate.

Per-Model Detail (n=11)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$69.301.03xyesFCF base $0.6B, growth 6% (input: historical growth), terminal g 4.0%, WACC 8.0%, 6yr projection
DCF Exit MultipleGrowth$70.881.00xyesExit EV/EBITDA: 23.3x / 25.3x / 27.3x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative——noP/E 34.46x (blended: static sector reference 24x + trailing (TTM) 59x), scenarios: 28.8x / 34.5x / 40.2x (bear / base = reference held flat / bull), EV/EBITDA 18.78x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$13.075.45xyesBV/sh $42.24, ROE (TTM) 2.9%, ke 9.3%
Two-Stage Excess ReturnAsset$7.739.21xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$55.301.29xyesRev $4.2B, growth 6% (input: historical growth; tapered), Terminal P/S: 2.7x / 3.3x / 3.8x (bear / base = today's held flat / bull, cap 8x)
Growth-Adjusted P/ERelative——no—
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$16.764.25xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.57B × (1−21%) / WACC 8.0% → EPV (no growth)
Residual IncomeAsset$5.7312.42xyesBV $42.24 + 5yr PV of (ROE (TTM) 2.9% − Kₑ 9.3%) × BV; BV grows 1.9%/yr
Graham NumberAsset$33.352.13xyes√(22.5 × EPS $1.17 × BVPS $42.24) — Graham's conservative floor
EV/EBITDA RelativeRelative——noEBITDA $0.64B × sector EV/EBITDA 16.0x
FCF YieldEarnings$19.673.62xyesFCF $569.5M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$16.014.45xyesSBC-adj FCF $0.50B (FCF $0.57B − SBC $0.07B) capitalized at Kₑ
Ben Graham FormulaEarnings$0.9872.62xyesEPS $1.17 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative——noRevenue $4.23B × sector P/S 4.0x
PEG Fair ValueRelative——no—
Earnings YieldEarnings$12.655.63xyesEPS $1.17 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

UnitRoleValuation basisRevenueReported profitValue evidenceStatus
CooperVisionoperatingenterprise$2.7b$729.6m operating-incomewithheldunresolved no unit value
CooperSurgicaloperatingenterprise$1.3b$43.4m operating-incomewithheldunresolved no unit value

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

FieldValue
Net debt$2.3b
Net debt / NOPAT (after-tax)5.90x
Net debt / operating income (pre-tax)4.66x
Interest coverage5.3x
Share count CAGR (buyback)-0.5%
Burning cashno

Bullet Takeaways

Bull Case

Watch what a company does with its balance sheet in the quarter it takes the largest legal charge in its history. Cooper accrued $324.1 million to settle the fertility media claims and still generated $182.8 million of operating cash flow, still funded $86.4 million of capital projects, and still brought interest expense down to $20.9 million from $24.2 million a year earlier on lower interest rates and lower average debt. That is not a company being carried by its lenders through a bad quarter. It is a company writing a large cheque out of ordinary cash flow.

It is also committing capital on a timescale that says something. The 10-Q discloses undiscounted lease payments of $140.2 million on leases that begin in the fourth quarter of fiscal 2026, with initial terms of 20 to 24 years, taken on in order to expand manufacturing as well as research and development capacity. Nobody signs a two-decade lease on a lens plant unless they think the demand is still there in 2046. Read alongside the settlement, the message is that management treats the recall as an episode rather than a repricing of the business.

The vision business is why they can think that way. CooperVision revenue of $723.5 million grew 8% last quarter, and the mix inside it is the interesting part. Toric and multifocal products, which correct astigmatism and presbyopia rather than simple short-sightedness, reached $364.9 million and grew 11% as reported, 7% in constant currency. The plain sphere category grew 5% and 1% on those same two measures. The more complicated prescription is where the pricing power sits, because it is harder to substitute and the wearer is typically older and less sensitive to price. Growth is coming from the right half of the portfolio.

That shows up where it should, in gross margin, which the company reported at 68% for the quarter. Set that against the medical-device cohort it is grouped with and the gap is visible: Stryker (SYK) runs a 63.8% gross margin, Haemonetics (HAE) 59.0%, Envista (NVST) 54.9%, Steris (STE) 44.2%. Contact lenses are a consumable bought on repeat by a patient who tried the alternative once and disliked it. That is a better economic structure than most of the surgical equipment Cooper sits next to in the sector tables.

And the share count is going the right way. Diluted shares used to compute earnings fell to 195.0 million in the second quarter of fiscal 2026 from 200.7 million a year earlier. Retiring shares while settling litigation and expanding plant capacity is a fairly complete answer to the question of whether the balance sheet has room.

Bear Case

Start with the structure of the liabilities, because that is where a stress scenario would actually bite. Cooper carries $2.46 billion of gross borrowings, and interest coverage sits near 5.8 times. In a normal year that is comfortable. This has not been a normal year: the accrued litigation liability jumped to $324.8 million from $0.7 million, a near-term obligation that did not exist twelve months ago, and it lands on top of a capital programme the company has already committed to through those 20-year manufacturing leases. Coverage measured against a year that included the settlement is a thinner cushion than the ratio suggests, and the flexibility to absorb a second surprise is correspondingly smaller.

There may be a second surprise waiting. Separately from the recall, Cooper has been in a dispute with HM Revenue & Customs (HMRC) relating to payroll tax withholding matters related to consideration paid to company founders in the acquisition of the Sauflon Group in 2014, and the U.K. First-tier Tribunal issued a decision on March 2, 2026 that largely supports the tax authority's position. Two open liabilities from two different decades, both crystallising in the same fiscal year, is a pattern worth noticing in a company that grew by acquisition.

The recall itself is not purely financial either. The claims were brought by individuals alleging damages from the recalled product, including claims of embryo loss or reduced embryo viability. CooperSurgical's business is selling certainty to people at the least forgiving moment of their lives, and that is a franchise where trust is the product. The settlements close the legal exposure. They do not automatically restore a clinic director's willingness to specify the same media.

Then there is the currency exposure, which is larger than most investors would guess. The 10-K states that a hypothetical 10% move in exchange rates against the dollar would have shifted operating income by roughly $114.4 million in fiscal 2025. That is a very large number relative to what this company earns from operations, and it was flattering results recently: last quarter's 8% reported revenue growth was 5% in constant currency, so three of those eight points were the dollar rather than the business.

All of which leads to the valuation, and here the bear has to be careful to argue the right thing. Only the forward-growth methods reach today's price. The asset-value methods land far below it, the earnings-power methods land far below it, and even the peer-multiple methods put the price about 50% above where they land. The honest caveat is that the trailing profit those static methods capitalize includes the litigation charge, so they are reading a depressed year. What does not change with that caveat is the shape of the conclusion: nothing anchored on current profitability supports this price, and the entire case rests on the compounding continuing at a pace only about 30% of comparable fast-growers have sustained for five years. The bear thesis is not that Cooper is a bad business. It is that the price has already assumed it is a very good one for a long time.

Valuation

Today's $70.27 works out to roughly 30x company-wide operating income, and running that backwards gives an embedded assumption of about 24.9% annual operating-profit growth over the next five years. One qualification belongs immediately next to that figure: the operating income in the denominator is the trailing twelve months, and that period includes $271.6 million of litigation expense from a single quarter. A multiple computed on a year with a one-off settlement in it overstates what an ordinary year would produce, so the honest reading is that the price is demanding rapid growth from a base that is temporarily understated.

How demanding is the assumption on its own terms? Against Cooper's own record, the annual rate is within what the company has recently delivered, and the stretch is in how long it must persist rather than how fast. Against the sector, the multiple sits in the upper half of the peer range. And across history, only about 30% of comparable fast-growers held that pace for five years. The overall read is elevated: above what the fundamentals comfortably support, without being the kind of assumption no company has ever met.

The methods disagree in the way they usually do for a compounder. Only the forward-growth methods reach the price. The peer-multiple methods land about 50% under it, and the asset-value and earnings-power methods land very far under. When only the growth-based lens supports a quote, the price is a durability premium: the market is paying for continuation that static, backward-looking methods cannot express by construction. The cash-flow method that gets closest is instructive about how it gets there. It reaches the price by holding the exit multiple flat at today's level all the way to the end of the projection, which is less a forecast of improvement than an assumption that nothing ever derates.

Cohort numbers put the operating economics in context. Stryker (SYK) earns a 19.7% operating margin on $25.3 billion of revenue and Steris (STE) 18.6%, while Zimmer Biomet (ZBH) sits at 14.0%, Envista (NVST) at 8.5% and Bausch & Lomb (BLCO) at 4.4% on $5.2 billion. Cooper's revenue base is roughly $4.2 billion, so it is a mid-sized name in that group carrying an above-average multiple, which is only coherent if the lens franchise deserves better economics than the surgical-equipment businesses beside it.

The balance sheet bounds the downside without resolving the question. Gross borrowings of $2.46 billion sit against interest coverage near 5.8 times, with interest expense falling rather than rising, $20.9 million last quarter against $24.2 million a year earlier. Free cash flow of $96.4 million in the quarter came after $86.4 million of capital spending, which is the level of reinvestment a manufacturer expanding capacity actually runs. The company can carry its obligations and fund its plants. What it cannot do from the balance sheet is supply the growth the price already assumes.

Catalysts

The event that matters most is not a quarterly print. On June 4, 2026, alongside second-quarter results, management stated that agreements had been reached to resolve substantially all of the outstanding claims related to CooperSurgical's fertility media recall, describing it as an important step allowing us to move forward with our strategic review of that business. A strategic review of a unit generating $358.0 million of quarterly revenue is a live question about what this company will consist of a year from now, and it changes how the second half of fiscal 2026 should be read.

The quarter itself was solid underneath the legal noise. Revenue of $1.0815 billion grew 8% as reported and 5% in constant currency, with CooperSurgical up 8% reported and 6% in constant currency, so the recall has not visibly cost that segment its top line. Operating cash flow was $182.8 million against $86.4 million of capital expenditures. The next set of numbers, and the next update on the review, is scheduled for August 26, 2026.

Sell-side positioning has drifted higher without conviction. Citi raised its target to $76 from $69 on July 17 while keeping a neutral rating. That is a target moving up with the share price rather than a change of view, and it sits close enough to the current quote that it implies no strong opinion about the strategic review's outcome either way.

Peer Cohorts (Per Segment, With Filing Citations)

CooperVision / CooperSurgical (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q2 fiscal 2026 results, June 4, 2026 · company earnings calendar, July 2026 · Citi research note, July 17, 2026

View the full interactive COO report on boothcheck