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 (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, notable return on equity, increase in stock price during the past year and increase in net income. We feel these strengths outweigh the fact that the company shows low profit margins.
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Highlights from the ratings report include:
- The debt-to-equity ratio is somewhat low, currently at 0.92, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.32, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has increased to $1,727.00 million or 37.28% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 2.22%.
- 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 Aerospace & Defense industry and the overall market on the basis of return on equity, UNITED TECHNOLOGIES CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- The net income growth from the same quarter one year ago has exceeded that of the Aerospace & Defense industry average, but is less than that of the S&P 500. The net income increased by 0.8% when compared to the same quarter one year prior, going from $1,318.00 million to $1,328.00 million.
United Technologies Corporation provides technology products and services to the building systems and aerospace industries worldwide. The company has a P/E ratio of 13.3, below the average conglomerates industry P/E ratio of 13.5 and below the S&P 500 P/E ratio of 17.7. United has a market cap of $70.65 billion and is part of the
industry. Shares are up 8.5% year to date as of the close of trading on Wednesday.
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--Written by a member of TheStreet Ratings Staff.