Cochlear Limited Fundamental Analysis (ASX: COH.AX)
Cochlear Limited (ASX: COH.AX) shows weak financial fundamentals with a PE ratio of 68.64, profit margin of 6.31%, and ROE of 8.01%. The company generates $2.3B in annual revenue with moderate year-over-year growth of 4.81%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 53.4/100 based on profitability, valuation, growth, and balance sheet metrics. The C grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze COH.AX's fundamental strength across five key dimensions:
Efficiency Score
WeakCOH.AX struggles to generate sufficient returns from assets.
Valuation Score
ModerateCOH.AX shows balanced valuation metrics.
Growth Score
WeakCOH.AX faces weak or negative growth trends.
Financial Health Score
ExcellentCOH.AX maintains a strong and stable balance sheet.
Profitability Score
WeakCOH.AX struggles to sustain strong margins.
Key Financial Metrics
Is COH.AX Expensive or Cheap?
P/E Ratio
COH.AX trades at 68.64 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, COH.AX's PEG of -1.11 indicates potential undervaluation.
Price to Book
The market values Cochlear Limited at 5.80 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 24.75 times EBITDA. This signals the market has high growth expectations.
How Well Does COH.AX Make Money?
Net Profit Margin
For every $100 in sales, Cochlear Limited keeps $6.31 as profit after all expenses.
Operating Margin
Core operations generate 12.89 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $8.01 in profit for every $100 of shareholder equity.
ROA
Cochlear Limited generates $5.66 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Cochlear Limited produces operating cash flow of $368.00M, showing steady but balanced cash generation.
Free Cash Flow
Cochlear Limited generates strong free cash flow of $306.90M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $4.69 in free cash annually.
FCF Yield
COH.AX converts 3.04% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
68.64
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
-1.11
vs 25 benchmark
P/B Ratio
Price to book value ratio
5.80
vs 25 benchmark
P/S Ratio
Price to sales ratio
4.33
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.12
vs 25 benchmark
Current Ratio
Current assets to current liabilities
2.15
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.08
vs 25 benchmark
ROA
Return on assets percentage
0.06
vs 25 benchmark
ROCE
Return on capital employed
0.15
vs 25 benchmark
How COH.AX Stacks Against Its Sector Peers
| Metric | COH.AX Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 68.64 | 31.14 | Worse (Expensive) |
| ROE | 8.01% | 554.00% | Weak |
| Net Margin | 6.31% | 5163.00% | Weak |
| Debt/Equity | 0.12 | 0.01 | Weak (High Leverage) |
| Current Ratio | 2.15 | 5.75 | Strong Liquidity |
| ROA | 5.66% | -245.00% (disorted) | Weak |
COH.AX outperforms its industry in 1 out of 6 key metrics, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Cochlear Limited's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
52.75%
Industry Style: Defensive, Growth, Innovation
High GrowthEPS CAGR
243.87%
Industry Style: Defensive, Growth, Innovation
High GrowthFCF CAGR
232.74%
Industry Style: Defensive, Growth, Innovation
High Growth