Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
(NYSE:) has been reiterated by TheStreet Ratings as a buy with a ratings score of A- . The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, expanding profit margins, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 8.3%. Since the same quarter one year prior, revenues slightly increased by 2.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The gross profit margin for COVIDIEN PLC is rather high; currently it is at 63.20%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 15.10% trails the industry average.
- Net operating cash flow has slightly increased to $721.00 million or 1.54% when compared to the same quarter last year. Despite an increase in cash flow, COVIDIEN PLC's cash flow growth rate is still lower than the industry average growth rate of 14.79%.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market on the basis of return on equity, COVIDIEN PLC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
Covidien Public Limited Company develops, manufactures, and sells healthcare products for use in clinical and home settings in the United States and internationally. The company has a P/E ratio of 14.6, equal to the average health services industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Covidien has a market cap of $27.3 billion and is part of the sector and industry. Shares are up 25.5% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.