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 (
Rockwell Automation Rises on $2.2 Billion Deal for Plex Systems
Rockwell Automation agreed to buy Plex Systems, a manufacturing-software platform, for $2.2 billion from the private-equity firm Francisco Partners.
) 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, good cash flow from operations, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. 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 11.9%. Since the same quarter one year prior, revenues slightly increased by 3.9%. 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.
- Net operating cash flow has slightly increased to $776.00 million or 9.60% when compared to the same quarter last year. In addition, TYCO INTERNATIONAL LTD has also modestly surpassed the industry average cash flow growth rate of 5.16%.
- 47.30% is the gross profit margin for TYCO INTERNATIONAL LTD which we consider to be strong. 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 5.40% trails the industry average.
- TYC's debt-to-equity ratio is very low at 0.29 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 0.83 is somewhat weak and could be cause for future problems.
- Compared to its closing price of one year ago, TYC's share price has jumped by 41.94%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the 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 20.2, below the average diversified services industry P/E ratio of 20.4 and above the S&P 500 P/E ratio of 17.7. Tyco International has a market cap of $25.95 billion and is part of the
industry. Shares are up 20.2% year to date as of the close of trading on Wednesday.
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--Written by a member of TheStreet Ratings Staff.
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