TSC Ratings' Updates: Fluor

Revenue rose by 17% since the same quarter last year, outpacing the industry average of 15.1% and boosting EPS by 19.6% 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 years, which we feel should continue. During the past fiscal year, St. Jude increased its bottom line by earning $1.60 vs. $1.48 in the prior year. This year, the market expects an improvement in earnings to $2.31.

St. Jude's gross profit margin is currently very high, at 77.9%, having increased from the same quarter last year. The net profit margin of 17.8% trails the industry average. ROE has slightly decreased from the same quarter a year ago, implying a minor weakness in the organization. On the basis of ROE, St. Jude outperforms the health care equipment and supplies industry average but underperforms the S&P 500. Shares are down 21.6% on the year, reflecting, in part, the market's overall decline. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

We've upgraded Aqua America(WTR Quote), which operates as the holding company for regulated utilities that provide water or wastewater services in the U.S., from hold to buy, driven by its growth in earnings per share, revenue growth, expanding profit margins, good cash flow from operations and increase in net income. We feel these strengths outweigh the fact that the company has had generally poor debt management on most measures that we evaluated.