NEW YORK (TheStreet) -- Shares of Jarden Corp. (JAH) are gaining by 4.89% to $52.54 in mid-morning trading on Tuesday, as the stock continues to rise following reports released Monday about the possibility of a merger between the consumer products company and Newell Rubbermaid (NWL).
The two companies are said to be in talks regarding a merger, sources told the Wall Street Journal. Terms of the possible deal have yet to be determined and there is always the possibility that the discussions will amount to nothing.
An average takeover premium could value Jarden at more than $13 billion, the Journal noted. If the two companies were to team up the combined entity would have about $14 billion in annual sales.
In November, Jarden acquired Jostens, a maker of class rings and other school memorabilia, for $1.5 billion. Prior to that the company bought disposable tableware maker Waddington Group Inc. for $1.4 billion in July.
Separately, TheStreet Ratings team rates JARDEN CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
We rate JARDEN CORP (JAH) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.5%. Since the same quarter one year prior, revenues slightly increased by 5.3%. 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.
- JARDEN CORP' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, JARDEN CORP increased its bottom line by earning $1.29 versus $1.21 in the prior year. This year, the market expects an improvement in earnings ($2.72 versus $1.29).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Household Durables industry average, but is greater than that of the S&P 500. The net income increased by 10.7% when compared to the same quarter one year prior, going from $108.60 million to $120.20 million.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- The gross profit margin for JARDEN CORP is currently lower than what is desirable, coming in at 34.39%. Regardless of JAH's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.32% trails the industry average.
- You can view the full analysis from the report here: JAH
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.