Cochlear (COH.AX)

Healthcare · ASX · Australia

A$122.92+10.42% today

Fundamentals

Market capA$7.95B

P/E ratio23.0

Dividend yield3.54%

Revenue growth (YoY)-0.4%

Profit margin14.8%

Return on equity18.1%

52-week rangeA$88.74 to A$319.56

Valuation and ratings

DCF fair valueA$48.65

Upside to fair value-60.4%

Analyst target (mean)A$125.39

Analyst rangeA$95.00 to A$170.00

Analysts covering16

Consensus viewbuy

Moat score65/100

Overall rating35/100, Reduce

Cochlear trades at A$122.92, which is 60% above the A$48.65 our discounted cash flow model puts on the business. On that measure it screens as expensive, which is not the same as saying it will fall.

Our moat model scores it 65 out of 100, which is a moat, but not a deep one. A moat is a structural reason competitors cannot take the profits away, and it matters more to a long holding period than any single quarter's numbers do.

It changes hands at 23.0 times earnings. Be careful reading that in isolation: for a cyclical business a low P/E arrives at the top of the cycle, when profits are peaking and about to fall, which is exactly when the shares look cheapest and are not.

About Cochlear

Cochlear Limited provides implantable hearing solutions for children and adults worldwide. The company offers cochlear implant systems, sound processor upgrades, bone conduction systems, and other products. It also provides cochlear nucleus systems, including Nucleus sound processors, smart bimodal hearing solution, and Nucleus implants; cochlear Baha systems comprising Baha 6 max sound processor and Baha implant; and accessories, such as wireless devices and Nucleus water-safe accessories. The company was founded in 1981 and is headquartered in Sydney, Australia.

Industry: Medical DevicesEmployees: 5,500HQ: Australia

COH.AX passes 6 of our 30 screens today

Each screen prints the exact criteria it used, and the circumstances in which it is wrong.

Dividend powerhouses

Yields above 3%, filtered for the one thing yield screens never check: whether the company can actually afford it.

Fortress balance sheets

Companies that owe almost nothing. They will survive things that kill their competitors, and they can buy the wreckage afterwards.

Low volatility defensives

Companies that move less than the market and pay you to wait. The holdings that let you sleep, and let you hold everything else.

Beaten down, but not broken

Good businesses whose share price has been punished. Sometimes the market is wrong. Sometimes it is early. The screen cannot tell you which.

Healthcare and pharma

Drug companies are engines that convert one expiring monopoly into the next. The patent cliff is the whole investment case.

Dividend aristocrats

Companies with long, unbroken records of raising their dividend. The record is the point: it is evidence, not a promise.

Common questions

Is Cochlear (COH.AX) undervalued?

Against our discounted cash flow estimate of A$48.65, COH.AX at A$122.92 is 60% above fair value. That is one model's answer, not a recommendation, and most of a DCF's output sits in a terminal value nobody can forecast.

What is COH.AX's P/E ratio?

COH.AX trades at 23.0 times earnings. A low P/E is not automatically cheap: on a cyclical company it is usually a warning that earnings are at a peak.

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Data from company filings, exchange quotes and SEC EDGAR 13F disclosures. Quotes are delayed. Metrics we do not have are left out rather than estimated. Educational information, not financial advice.