Earnings Recap: Cooper Companies Results Push Shares To All-Time Highs

| About: The Cooper (COO)

Shares of Cooper Companies (NYSE:COO) trade 6% higher in after-hours trading as the company issued a favorable earnings report. Shares trade around all time highs of $83 at the moment. The global medical products company, which focuses on vision and surgical solutions, raised its full year outlook on the back of a strong first quarter.

First Quarter Results
Cooper Companies announced a 11% increase in revenues for the first quarter of 2012 to $326 million. Earnings per share rose 35% to $1.12. The company expects a healthy growth in terms of profits and revenues for all divisions in all major geographic areas for the remainder of 2012.

For the full year of 2012 Cooper now expects revenues to come in at $1.385-$1.44 billion, which represents sales growth of 4-8%. The earnings outlook is raised from $4.80-$5.00 to $4.90-$5.15 which comes ahead of analysts expecting $4.95. The guidance implies a 39% net profit growth year-on-year and net margin expansion to a record 17%.

With a valuation of around $4 billion, the company is valued at roughly 3 times 2011 revenues and 23 times earnings. The price-earnings ratio will drop to a much more reasonable 16 times based on the 2012 profit guidance, which seems reasonable for a health care company showing years of interrupted revenue and earnings growth. Investors should focus on capital gains as the company pays a mere $0.03 quarterly dividend.

Investment Thesis
Cooper Industries is an amazing company with steady fundamentals valued at a fair price. It is too bad that I had not seen this company, which focuses on vision and production of lenses, before it rallied so much.
Shares trade at a fair price after moving from $20 to $80 in a couple of years. Depending on the general market sentiment I could see shares hitting a $100 before year end, yet I think there are better opportunities out there.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.