CooperCompanies (COO) Q3 2026 Financial Results Summary
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CooperCompanies (COO) Q3 2026: Earnings Surge Driven by Tax Benefit — Positive Outlook
CooperCompanies (Nasdaq: COO) reported its fiscal third quarter results for the period ending July 31, 2026, showcasing a significant improvement in earnings compared to the previous year. The company achieved a revenue increase of $5.9 million or +1% year-over-year, totaling $1.066 billion. This growth was complemented by a remarkable rise in GAAP diluted earnings per share (EPS), which soared to $2.24 from $0.49 in the same quarter last year, primarily due to a $307.2 million discrete tax benefit.
This quarter's performance is a positive development for shareholders, as the substantial increase in EPS reflects not only the tax benefit but also effective management of operating expenses and a strong free cash flow generation of $273.0 million, up 66% from the prior year. The company’s strategic review process has concluded, and it is now focused on enhancing shareholder value through disciplined capital allocation and profitable growth.
Key Financial Metrics:
- Revenue: $1.066 billion, up $5.9 million or +1% YoY
- GAAP Diluted EPS: $2.24, up from $0.49 YoY
- Non-GAAP Diluted EPS: $1.15, up 4% YoY
- Free Cash Flow: $273.0 million, up 66% YoY
- Gross Margin: 67%, up from 65% YoY
- Operating Margin: 21%, up from 17% YoY
- Share Repurchase: $339.1 million, approximately 4.9 million shares at an average price of $69.16
Analysis and Opinion
The quarter's results are encouraging for shareholders, particularly due to the impressive jump in GAAP EPS driven by the tax benefit. While the revenue growth was modest at 1%, the underlying performance in free cash flow and margins indicates a well-managed operation. The increase in gross margin to 67% and operating margin to 21% reflects effective cost management and operational efficiency.
However, it is important to note that CooperVision's revenue remained flat at $717.0 million, with specific categories like spherical lenses experiencing a 2% decline. The proactive inventory reduction in the U.S. channel may have weighed on results, suggesting potential challenges in the upcoming quarter.
The company has also expanded its share repurchase authorization from $2 billion to $3 billion, with approximately $1.5 billion remaining available. This move signals confidence in the company's future prospects and commitment to returning value to shareholders.
Guidance Update
CooperCompanies has updated its fiscal year 2026 guidance, projecting total revenue for Q4 2026 to be between $1.057 billion and $1.080 billion, with organic growth expected to range from 0% to 2%. Specifically, CooperVision revenue is anticipated to be between $692 million and $706 million, reflecting a potential organic decline of 2% to 0%. In contrast, CooperSurgical revenue is expected to grow between $364 million and $374 million, with organic growth of 4% to 6%.
The company also reaffirmed its long-term free cash flow objective, aiming to exceed $2.2 billion for fiscal years 2026 through 2028, which is a positive indicator for sustained financial health.
Forward-Looking Catalysts
Investors should closely monitor the upcoming quarter for signs of recovery in CooperVision's revenue, particularly as the company navigates the impact of inventory adjustments. Additionally, the execution of the strategic review and the effectiveness of capital allocation strategies will be critical in determining the company's ability to enhance shareholder value moving forward. The market will also be watching for any updates on product launches and regulatory developments that could impact growth trajectories in both CooperVision and CooperSurgical segments.
In summary, while the quarter showed strong earnings growth primarily due to a tax benefit, the underlying operational challenges in CooperVision warrant attention as the company moves into the next quarter.
Consolidated Condensed Statements of Income
(In millions, except per share amounts)
Note: The amounts in the following tables are in thousands.
| Three Months Ended | Nine Months Ended | |||
|---|---|---|---|---|
| July 31, 2026 | 2025 | July 31, 2026 | 2025 | |
| Net sales | $1,066.2 | $1,060.3 | $3,171.8 | $3,027.3 |
| Cost of sales | 354.3 | 368.3 | 1,029.3 | 996.0 |
| Gross profit | 711.9 | 692.0 | 2,142.5 | 2,031.3 |
| Selling, general and admin expenses | 401.3 | 421.7 | 1,467.7 | 1,208.6 |
| Research and development expenses | 41.6 | 44.6 | 128.4 | 130.8 |
| Amortization of intangible assets | 47.0 | 50.0 | 142.6 | 149.4 |
| Operating income | 222.0 | 175.7 | 403.8 | 542.5 |
| Interest expense | 21.5 | 25.4 | 64.8 | 75.6 |
| Other (income) expense net | -1.3 | -1.6 | -6.6 | 17.2 |
| Income before income taxes | 201.8 | 151.9 | 345.6 | 449.7 |
| Provision for income taxes | -231.0 | 53.6 | -140.1 | 159.4 |
| Net income | $432.8 | $98.3 | $485.7 | $290.3 |
| Earnings per share (diluted) | $2.24 | $0.49 | $2.49 | $1.45 |
| Number of shares used to compute diluted earnings per share | 193.4 | 200.0 | 195.2 | 200.6 |
EPS, amounts and percentages may not sum or recalculate due to rounding.
Consolidated Condensed Balance Sheets
(In millions)
Note: The amounts in the following tables are in millions.
| July 31, 2026 | October 31, 2025 | |
|---|---|---|
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $154.7 | $110.6 |
| Trade receivables, net | 788.9 | 829.0 |
| Inventories | 911.5 | 846.0 |
| Prepaid expense and other current assets | 426.4 | 320.8 |
| Total current assets | 2,281.5 | 2,106.4 |
| Property, plant and equipment, net | 2,144.9 | 2,082.0 |
| Goodwill | 3,876.3 | 3,853.4 |
| Other intangibles, net | 1,445.9 | 1,586.3 |
| Deferred tax assets | 2,267.9 | 2,077.5 |
| Other assets | 656.9 | 689.2 |
| Total assets | $12,673.4 | $12,394.8 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
| Current liabilities: | ||
| Short-term debt | $628.1 | $47.8 |
| Accounts payable | 251.2 | 300.4 |
| Employee compensation and benefits | 174.6 | 210.6 |
| Deferred revenue | 129.6 | 127.9 |
| Accrued litigation liability | 316.5 | 0.7 |
| Other current liabilities | 366.6 | 425.4 |
| Total current liabilities | 1,866.6 | 1,112.8 |
| Long-term debt | 1,916.1 | 2,457.5 |
| Deferred tax liabilities | 94.2 | 93.3 |
| Long-term tax payable | 2.4 | 7.5 |
| Deferred revenue | 208.7 | 201.8 |
| Other liabilities | 257.0 | 282.8 |
| Total liabilities | 4,345.0 | 4,155.7 |
| Stockholders’ equity | 8,328.4 | 8,239.1 |
| Total liabilities and stockholders' equity | $12,673.4 | $12,394.8 |
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