NEW YORK (TheStreet) -- Koninklijke Philips NV (PHG - Get Report), the Dutch lighting and healthcare company, will merge its Lumileds LED components and automotive lighting divisions into a standalone subsidiary which could potentially be spun off, Reuters reports.
Philips said its lighting division would remain a key customer for the new subsidiary but that it would look for third-party investors. It did not rule out becoming a minority shareholder in the business, which could also be floated, Reuters said.
Shares of Philips are up 2.72% to $31.30 in pre-market trading.
- PHG's revenue growth has slightly outpaced the industry average of 0.6%. Since the same quarter one year prior, revenues slightly increased by 2.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- The current debt-to-equity ratio, 0.34, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.78 is somewhat weak and could be cause for future problems.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- The change in net income from the same quarter one year ago has exceeded that of the Industrial Conglomerates industry average, but is less than that of the S&P 500. The net income has decreased by 7.8% when compared to the same quarter one year ago, dropping from $206.34 million to $190.12 million.
- You can view the full analysis from the report here: PHG Ratings Report