COOPER COMPANIES, INC. (COO) stock intrinsic value fair value estimate & owner earnings analysis

Cooper makes contact lenses (CooperVision, $2.74 billion of fiscal 2025 sales, up 5%) and women's health and fertility products and services (CooperSurgical, $1.35 billion, up 5%). Half of sales are in the United States, about 31% in Europe and the rest elsewhere. CooperVision is the engine: its segment operating profit was $730 million in fiscal 2025, against only $43 million at CooperSurgical after $178 million of amortization of acquired businesses (before that non-cash amortization, and after its own depreciation and capital spending, CooperSurgical generated roughly $207 million before tax and corporate costs). Contact lenses are a repeat-purchase consumable, which is why revenue fell in only one of the last ten years (2020, down 8%). How we measure earnings. We take operating cash flow, remove the swings in receivables, inventory, payables, accruals and taxes payable, then subtract stock compensation and the capital spending needed to stand still. Cooper spends about twice what its plants wear out (capex $362 million versus $178 million of depreciation in 2025, mostly for CooperVision capacity), and almost all of that is deducted because revenue growth explains only a sliver of it. We then add back interest paid, because we value the whole business first and subtract the lenders' claim afterwards. The result for the last seven fiscal years (2019 to 2025, starting after the Paragard and Sauflon acquisitions and including the 2020 pandemic trough) ranges from $250 million (2020) to $660 million (2025); the middle year is $534 million, about $2.76 per share on 193.4 million shares. Fiscal 2025 rose 23.5% over 2024 on this basis. We estimate CooperVision supplies about $364 million of the anchor and CooperSurgical about $150 million, after a roughly $20 million tax step-up described below. Our base case starts below fiscal 2025, at $501 million, because a seven-year median is the level we trust, not the latest year. Judgement calls: the large one-time U.S. transition-tax accrual in 2018 was removed as non-cash; the receivable build was treated as timing, but we note receivables rose 16% in 2025 against 5% sales growth (about 74 days of sales, versus 67 a year earlier) and have lengthened since 2018 (about 54 days then), so the base case charges $20 million a year (then $10 million) for the working capital its modest growth requires. The $231 million income-tax benefit in the July 2026 quarter, which turned a $202 million pre-tax profit into $433 million of reported profit, is not earnings and is ignored. Roughly $199 million a year of amortization of acquired intangibles is added back as sunk cost; the decay is carried instead in CooperSurgical's path below. What each case assumes. Base: CooperVision's cash flow grows 2% a year for five years and 1% for five, well under its recent 5% sales growth, then holds flat; we do not credit market growth, share gains from newer daily lenses or lower capital spending, none of which is secured. CooperSurgical's cash flow slips from $150 million to $130 million by 2029 and stays there: a rival non-hormonal IUD (Miudella) was FDA approved as the 10-K notes, management said in September 2026 that an approved competitor launched during the quarter, and Paragard and the obp Surgical acquisition were the main reasons office and surgical sales grew in 2025. From fiscal 2027 we also deduct $20 million a year because scheduled GILTI changes lift the company's tax rate from about 15.5% to about 17.5%. Business worth $8.84 billion ($45.72 a share); it owes $2.87 billion ($14.84 a share): $2.54 billion of borrowings ($628 million is classified as current; the $2.3 billion revolver matures May 2029) plus $326 million accrued for the embryo-loss class settlement, about $272 million of which the company expects to pay in the fourth quarter. The difference is about $30.89 a share. Bear: capital spending stays at its 2023-2025 average (about $73 million a year above the seven-year average), CooperSurgical's cash flow falls to $75 million as Paragard and fertility pressure persist, a repeat of the 2020 shutdown (cash flow fell 55%) cuts CooperVision's cash flow 55% in year three and it recovers only to 80% in year four, another $100 million is lost on the individual embryo-loss suits still pending (press reports count at least 30), and earnings drift down 1% a year after year ten. Business worth $5.48 billion ($28.32 a share), owes $2.97 billion ($15.35 a share), leaving $12.97 a share. Even at the trough year, cash flow of about $206 million covers annual interest of roughly $100 million, so the debt is serviceable. Bull: the starting level is fiscal 2025's $660 million less the tax step-up (about $640 million), CooperSurgical holds at $150 million, and CooperVision grows 4% a year for five years and 2% for five, below the 4-6% market growth management described for fiscal 2027; working-capital needs are charged at $40 million a year, then $20 million. The business is worth $12.51 billion ($64.69 a share), owes $2.87 billion, leaving $49.85 a share. What changed since our last look. Our earlier figures used a different method and are not comparable. In the business: the embryo-loss settlement is now accrued ($272 million charge in the first half of fiscal 2026) and about to be paid; the board concluded its strategic review on September 9, 2026 and kept CooperSurgical rather than selling it; the rival IUD has launched; the tax rate steps up in 2027; and Cooper repurchased about $445 million of stock this fiscal year, funded partly by borrowing, which lowered the share count to about 193 million. Cash generation strengthened (nine-month operating cash flow of $785 million versus $548 million), but we do not move the earnings level on that until it persists. What would make this wrong. If the receivable and inventory build proves a permanent cost of staying in business rather than timing, base value falls; a 10% lower CooperVision level gives $27.75 a share. If CooperSurgical's cash flow proves worthless, base value is $19.54 a share. Upside comes from capital spending falling toward depreciation, which we did not credit. Margin-of-safety price. We are fairly sure of the contact-lens business: a recurring-purchase consumable with a seven-year cash record, but the level has swung from $250 million to $660 million and the capital spending drag has not yet visibly eased. We are much less sure of CooperSurgical, where the largest profit source faces a new competitor, litigation is not finished and past acquisitions have earned little after amortization. The worst plausible outcome is the bear case plus a larger litigation bill; the business survives that because trough cash flow is about twice interest and the revolver runs to 2029, but about $15 of each share's value is owed to lenders and settlement claimants, so every dollar of error in the business shows up more than once in the share. If we are wrong on CooperSurgical, shares are worth about $19.5; if wrong on capital spending staying high, closer to the bear case at about $13. Cooper pays no dividend, so cash reaches shareholders only through debt paydown and buybacks, and the price assumes a holding period of three years or more. The margin-of-safety price is $15.00: from that price the bear case implies a loss of about 14%, an outcome in which CooperSurgical proves worthless implies roughly 16% a year over three years, and the base case implies about 35% a year.