TSC Ratings' Updates: Foster Wheeler

Net income has decreased 5.8% when compared with the same quarter one year ago, greatly exceeding the S&P 500 but underperforming the textiles, apparel and luxury goods industry. The gross profit margin is currently very high, coming in at 74.2%, but it has managed to decrease from the same period last year. Net profit margin of 19.40% compares favorably to the industry average. Coach has improved earnings per share by 7.3% in the most recent quarter compared with the same quarter a year ago. The company has demonstrated a pattern of positive EPS growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, Coach increased its bottom line by earning $2.18 vs. $1.69 in the prior year. This year, the market expects further improvement to $2.23. Revenue growth of 11.2% since the same quarter a year ago trails the industry average of 31.2%.

We've downgraded Foster Wheeler(FWLT Quote), which provides construction and engineering services to the oil and gas and other sectors worldwide, from buy to hold. Strengths include its impressive record of earnings per share growth, compelling growth in net income and robust revenue growth. Weaknesses include weak operating cash flow, a generally disappointing performance in the stock itself and poor profit margins.

Foster Wheeler reported significant earnings per share improvement in the most recent quarter compared with the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two year, and we feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, the company bottom line by earning $2.73 vs. $1.70 in the prior year. This year, the market expects an improvement in earnings to $3.72. Net income growth of 123.7% from the same quarter one year ago has significantly exceeded that of the S&P 500 and the construction and engineering industry.