4. Tyco International (TYC) is an industrial conglomerate. Its subsidiaries sell products ranging from security devices to industrial valves.
Fundamentals: Tyco's 12-month sales have risen a paltry 0.9%. Fiscal fourth-quarter profit expanded 30% to $266 million, or 55 cents a share, as revenue ascended 4% to $4.5 billion. The operating margin stretched from 9.6% past 10%. Tyco held $1.8 billion of cash and $4.2 billion of debt at the end of the quarter, translating to a quick ratio of 0.8 and a debt-to-equity ratio of 0.3. Amid tepid sales growth, cost reductions have bolstered net income.
Valuation: Tyco's stock trades at a forward earnings multiple of 12 and a book value multiple of 1.4, 21% and 37% discounts to industrial conglomerate industry averages. Its trailing earnings multiple of 18, sales multiple of 1.2 and cash flow multiple of 7.6 are on par with conglomerate peer averages. The stock's PEG ratio of 0.6 reflects a 40% discount to estimated fair value. Morgan Stanley offers a bullish-scenario target of $61 and a bearish-scenario target of $32.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV