NEW YORK (
) 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, growth in earnings per share, increase in net income, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 2.4%. Since the same quarter one year prior, revenues slightly increased by 9.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- TYCO INTERNATIONAL LTD has improved earnings per share by 6.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, TYCO INTERNATIONAL LTD increased its bottom line by earning $3.26 versus $2.31 in the prior year. This year, the market expects an improvement in earnings ($3.67 versus $3.26).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Industrial Conglomerates industry average. The net income increased by 3.8% when compared to the same quarter one year prior, going from $315.00 million to $327.00 million.
- TYC's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.82 is somewhat weak and could be cause for future problems.
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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.
Tyco International Ltd. provides security products and services, fire protection and detection products and services, valves and controls, and other industrial products worldwide. It operates through three segments: Tyco Security Solutions, Tyco Fire Protection, and Tyco Flow Control. The company has a P/E ratio of 17.9, equal to the average diversified services industry P/E ratioand above the S&P 500 P/E ratio of 17.7. Tyco International has a market cap of $25.01 billion and is part of the
industry. Shares are up 15.7% year to date as of the close of trading on Wednesday.
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--Written by a member of TheStreet Ratings Staff.
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.