The management and technical support company reported earlier this month first-quarter earnings of $47.9 million, or 42 cents a share, which fell from year-ago earnings of $56.9 million, or 48 cents."We continue to view ACM's valuation as notably depressed vs. its peers and expect this valuation gap to correct as visibility on ACM's ability to deliver a back-end loaded FY12 improves," KeyBanc Capital Markets analysts wrote in a Feb. 6 report. Shares of Aecom Technology were upgraded to buy from hold at TheStreet Ratings. "The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures," TheStreet Ratings wrote. "We feel these strengths outweigh the fact that the company has had sub par growth in net income." Aecom Technology has a forward P/E of 8.07; the average for heavy construction companies is 13.81. For comparison, KBR (KBR) and Granite Construction (GVA) both have higher forward P/Es of 12.57 and 19.78, respectively. Eleven of the 15 analysts who cover Aecom Technology rated it a buy and four gave it a hold rating. Aecom Technology gets a B grade from TheStreet Ratings with a $26.85 price target. The stock closed Tuesday at $23.25 and has increased 13.03% year to date.
Tempur-Pedic International The bedding products company reported last month first-quarter earnings of $56.3 million, or 84 cents a share, an increase from year-ago earnings of $46.3 million, or 66 cents. Of the company's new Simplicity Collection, William Blair analysts wrote in a Jan. 31 report that, "We believe the new mattress line will help enhance Tempur's leadership position in the premium specialty segment--by effectively doubling the company's addressable market in the United States--and be highly incremental to sales. In addition to the new collection, the company is implementing an enhanced set of go‐to‐market programs designed to drive profitable category growth, benefiting both Tempur and its retailers, through increased advertising investment and enhanced dealer programs. We believe these new programs, coupled with Tempur's existing leadership position in the advantaged premium specialty bedding segment, position the company for another year of strong growth in 2012." Shares of Tempur-Pedic International were upgraded to buy from hold by TheStreet Ratings. "The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income," TheStreet Ratings wrote. "We feel these strengths outweigh the fact that the company has had generally poor debt management on most measures that we evaluated." Tempur-Pedic has a forward P/E of 16.27; the average for furnishing companies is 26.25. For comparison, Leggett & Platt (LEG) has a lower forward P/E of 13.39 and Select Comfort's (SCSS) forward P/E is 16.76. Eleven of the 15 analysts who cover Tempur-Pedic rated it a buy and four gave it a hold rating. TheStreet Ratings gives Tempur-Pedic a B grade and $97.22 price target. The stock closed Tuesday at $74.08 and has risen 41.02% year to date.