COH share price in focus
Cochlear, established in 1981 in Sydney, is a leading medical device company specializing in hearing solutions. The company designs, manufactures, and distributes three types of hearing implants tailored to various medical needs.
As a global leader in hearing technology, Cochlear has delivered over 750,000 implantable devices and employs more than 5,000 people across 50+ countries.
Its mission is to enhance the quality of life for individuals living with hearing-related conditions.
The key metrics
For investors, COH’s revenue, gross margin, and profit can provide valuable insights into the company’s performance.
COH last reported an annual revenue of $2,236m with a compound annual growth rate (CAGR) over the last 3 years of 14.3% per year. While the absolute number is useful to know, the key point is the trend. We want to see a consistent, upward trajectory in revenue.
Gross margin measures profitability before taking into account overhead costs – it reflects the strength of the company’s core business operations. COH’s latest reported gross margin stood at 74.9%.
Finally, the number we’re most interested in – profit. Last financial year Cochlear Ltd reported a profit of $357m. Three years ago they made a profit of $324m, representing a CAGR of 3.3%.
Financial health of COH shares
Profitability is important, but equally important is the capital health of the company. We want to know about the company’s leverage, their capacity to pay debts, and their ability to generate a return on assets. One measure we can look at is net debt. This is simply the total debt minus the company’s cash holdings.
Cochlear Ltd’s net debt currently sits at -$270m. A negative value here indicates that the company has more assets than debt, suggesting COH is in a stong financial position.
Another figure we can look at is the debt/equity percentage. This tells us how much debt the company has relative to shareholder equity – this is also known as leverage. COH has more equity than debt, with a debt/equity ratio of 13.2%.
Finally, we can look at the return on equity (ROE). The ROE tells us how efficiently the company is turning shareholder equity into profit – high numbers indicate the company is generating a lot of value for investors, while a low number raises concerns that capital isn’t necessarily being allocated efficiently. COH generated an ROE of 19.9% in FY24.
What to make of COH shares?
With strong revenue growth over the last 3 years, profits trending upwards, and a solid ROE, the COH share price could be one worth watching in 2025.
Please keep in mind this should only be the beginning of your research. Company quality is one thing, but making sure the valuation is reasonable is another entirely. There are many ways you can try to value a company. If you want to learn more about share price valuation, you can sign up for one of our many free online investing courses.
