DCF Studio

    COO · NMS · Healthcare

    The Cooper Companies, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 34.55

    Market price

    USD 55.29

    Implied upside

    -37.5%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 34.55-37.5%
    Exit multiple
    USD 58.36+5.6%
    Market price
    USD 55.29

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m187m373mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 4.4bnUSD 4.7bnUSD 5.1bnUSD 5.4bnUSD 5.8bn+7.3%
    EBITUSD 713.7mUSD 766.1mUSD 822.4mUSD 882.8mUSD 947.6m+7.3%
    NOPATUSD 563.8mUSD 605.2mUSD 649.7mUSD 697.4mUSD 748.6m+7.3%
    Add depreciation & amortisationUSD 434.3mUSD 466.2mUSD 500.5mUSD 537.2mUSD 576.7m+7.3%
    Less capital expenditureUSD -416.3mUSD -446.9mUSD -479.7mUSD -515.0mUSD -552.8m+7.3%
    Less increase in working capitalUSD -300.6mUSD -322.7mUSD -346.4mUSD -371.9mUSD -399.2m+7.3%
    Free cashflow to firmUSD 281.2mUSD 301.8mUSD 324.0mUSD 347.8mUSD 373.4m+7.3%
    Discount factor0.95920.88240.81180.74690.6871-
    Present valueUSD 269.7mUSD 266.3mUSD 263.0mUSD 259.8mUSD 256.5m-1.2%
    Present Value Of The ForecastUSD 1.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.878Reported 0.818, pulled toward 1.0 (Blume)
    Cost of equity9.83%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 10.5bn80.8% of capital
    Total debtUSD 2.5bn19.2% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.70%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 34.55

    86% of EV

    Forecast FCFF, final year
    USD 373.4m
    Capex at depreciation, working capital in reinvestment
    USD 986.4m
    Less reinvestment at g/ROIC (28.7% of NOPAT)
    USD -283.6m
    Capitalised
    USD 702.8m
    ROIC (WACC floor)
    8.7%
    Terminal value, undiscounted
    USD 11.6bn
    Terminal value, discounted
    USD 8.0bn
    Enterprise value
    USD 9.3bn
    Less net debt
    USD 2.4bn
    Equity value
    USD 6.9bn

    Exit at 12.2x EBITDA

    Value per shareUSD 58.36

    91% of EV

    Terminal value, undiscounted
    USD 18.6bn
    Terminal value, discounted
    USD 12.8bn
    Enterprise value
    USD 14.1bn
    Less net debt
    USD 2.4bn
    Equity value
    USD 11.7bn

    Spread between methods: 51%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.70%50.7651.0451.3251.5951.87
    7.70%41.3541.5841.8142.0442.27
    8.70%34.1634.3634.5534.7434.94
    9.70%28.5028.6728.8429.0029.17
    10.70%23.9424.0924.2324.3824.53

    Outlined: this model. Green text: above today's price of 55.29. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year7.3%21.4%+14.0pp
    EBIT margin16.2%24.0%+7.7pp
    Discount rate8.7%6.4%-2.3pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.