Why Cooper Companies (COO) Stock Is Falling Today

NEW YORK (TheStreet) -- Cooper Companies (COO) shares are down -1.2% to $144.95 after Standard & Poor's lowered its 'BBB' credit rating to "negative" from "stable".

The firm does not agree with the medical device maker's plan to purchase Suaflon Pharmaceuticals, a contact lens manufacturer, for $1.2 billion due to the added debt the company will have to take on after the close of the deal.

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TheStreet Ratings team rates COOPER COMPANIES INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate COOPER COMPANIES INC (COO) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, increase in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • COO's revenue growth has slightly outpaced the industry average of 3.6%. Since the same quarter one year prior, revenues slightly increased by 7.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • COO's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.22, which illustrates the ability to avoid short-term cash problems.
  • COOPER COMPANIES INC has improved earnings per share by 6.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, COOPER COMPANIES INC increased its bottom line by earning $5.96 versus $5.06 in the prior year. This year, the market expects an improvement in earnings ($6.89 versus $5.96).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Health Care Equipment & Supplies industry average, but is less than that of the S&P 500. The net income increased by 5.3% when compared to the same quarter one year prior, going from $75.14 million to $79.16 million.
  • Net operating cash flow has slightly increased to $126.33 million or 9.94% when compared to the same quarter last year. In addition, COOPER COMPANIES INC has also modestly surpassed the industry average cash flow growth rate of 7.63%.
  • You can view the full analysis from the report here: COO Ratings Report
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