Why Is Everyone Ignoring Cooper Companies Stock’s High Cash Yield?
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Cooper Companies (COO) produced free cash flow over its last twelve months equal to 5.6% of its market value, against 4.2% for the median S&P 500 company. A yield that high marks either a business on sale or one the market expects to shrink, and the price has gone the wrong way: Cooper’s shares lost 13.3% over the past year while the S&P 500 returned 12.2%. So why does the share price pay so little for Cooper’s cash? So far, the cash itself has held up, though Cooper expected large litigation payments in fiscal Q4. The 5.6% figure covers the twelve months to July 31, before those payments: for fiscal Q4, management expected around $170 million of free cash flow, excluding litigation-related payments of roughly $272 million, so they will weigh on near-term cash.
How Much Cash Does Cooper’s Business Produce?
Over the twelve months to July 31, 2026, Cooper’s business produced $678 million of free cash flow, up from $189 million two years earlier. Like profit, this cash belongs to shareholders regardless of whether the company pays it out. When the market recognizes cash like that, the stock price tends to follow, especially when the cash is growing.
Cooper sells contact lenses through CooperVision and fertility and surgical products through CooperSurgical. Over those twelve months, the company’s free cash flow amounted to 16.0% of revenue. It directed 34.4% of its cash from operations toward capital spending, and free cash flow has remained above zero in every twelve-month period since July 2023. During a September 9, 2026 call, management said fiscal Q3 delivered the highest quarterly free cash flow in Cooper’s history, crediting stronger operations, better working capital and lower capital spending.
A portion of this cash must first service Cooper’s debt. Net of cash, that debt stood at $2.39 billion at July 31, 2026, representing 19.9% of the company’s market value. Counting that debt in the company’s value, the free cash flow yield is 4.7%.
Cooper’s Contact Lens Sales Have Stalled
The share price appears to assume that CooperVision has stopped growing: its fiscal Q3 2026 revenue of $717 million was essentially flat from a year earlier. In September, management cut its forecast for CooperVision’s fiscal 2026 organic growth to 1.5% at the midpoint, down from 4.0% in June.
Management blamed its own move to cut how many lenses U.S. distributors hold, and a double-digit drop in sales of older hydrogel lenses it is phasing out. U.S. wearers kept buying at a mid-single-digit rate, management said, and it planned to finish the stock cut in fiscal Q4. Management also said Cooper has fewer salespeople than its competitors and is hiring more in the U.S.
Cooper’s operating margin over twelve months fell to 12.8% from 18.3% a year earlier. That period includes an operating loss in fiscal Q2 2026, when Cooper took a $271.6 million charge to settle litigation in its fertility business. Revenue still grew 4.7% over those twelve months.
Cooper Expected Large Litigation Payments In Fiscal Q4
The twelve-month cash figure ends on July 31. For fiscal Q4, management guided to about $170 million of free cash flow, excluding litigation-related payments of about $272 million. Counting those payments, that points to about $102 million of cash going out in the quarter.
Cooper also expected a fiscal Q4 interest expense of about $25 million, up from $21.5 million in fiscal Q3, on added borrowing tied partly to those payments. Management also tied that borrowing to share buybacks, which came to $644 million in the four quarters to July 31, 2026. Over the latest twelve months, operating income covered interest 6.1 times.
Cooper’s free cash flow has grown for two years, and management aims for $2.2 billion of free cash flow across fiscal 2026 to 2028, even as Cooper borrows more. So far, the case for renewed growth in lens sales comes from management’s account of steady U.S. demand, not from a reported result. CooperVision’s organic growth and Cooper’s free cash flow after those payments are the two figures to watch when the company reports in December 2026.
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