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, expanding profit margins, good cash flow from operations, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
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Highlights from the ratings report include:
- VZ's revenue growth has slightly outpaced the industry average of 3.3%. Since the same quarter one year prior, revenues slightly increased by 3.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The gross profit margin for VERIZON COMMUNICATIONS INC is rather high; currently it is at 61.80%. 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 6.40% trails the industry average.
- Net operating cash flow has increased to $9,314.00 million or 20.07% when compared to the same quarter last year. Despite an increase in cash flow, VERIZON COMMUNICATIONS INC's average is still marginally south of the industry average growth rate of 20.78%.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 26.49% over the past year, a rise that has exceeded that of the S&P 500 Index. 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.
- VERIZON COMMUNICATIONS INC has improved earnings per share by 12.3% in the most recent quarter compared to the same quarter a year ago. 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, VERIZON COMMUNICATIONS INC reported lower earnings of $0.86 versus $0.90 in the prior year. This year, the market expects an improvement in earnings ($2.49 versus $0.86).
Verizon Communications Inc. provides communications, information, and entertainment products and services to consumers, businesses, and governmental agencies worldwide. The company has a P/E ratio of 42.2, below the average telecommunications industry P/E ratio of 43.7 and above the S&P 500 P/E ratio of 17.7. Verizon has a market cap of $125.86 billion and is part of the
industry. Shares are up 6.2% year to date as of the close of trading on Thursday.
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--Written by a member of TheStreet Ratings Staff.