NEW YORK (TheStreet) -- Sigma-Aldrich (SIAL) shares are up 33.56% to $136.76 on Monday after the life sciences chemical company agreed to be bought by Merck (MRK) - Get Report for $17 billion in cash as it seeks to bolster its chemicals and laboratory equipment sectors.
Merck, the German-based global healthcare company, will purchase the St. Louis-based Sigma-Aldrich for $140 per share, a 37% premium over the stock's previous closing price.
See why TheStreet's Jim Cramer says the German acquisitions of American companies, which include Sigma-Aldrich, Dresser-Rand and TRW, are important:
TheStreet Ratings team rates SIGMA-ALDRICH CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate SIGMA-ALDRICH CORP (SIAL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these 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:
- SIGMA-ALDRICH CORP has improved earnings per share by 13.3% 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, SIGMA-ALDRICH CORP increased its bottom line by earning $4.05 versus $3.78 in the prior year. This year, the market expects an improvement in earnings ($4.36 versus $4.05).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Chemicals industry average. The net income increased by 11.8% when compared to the same quarter one year prior, going from $119.00 million to $133.00 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 7.6%. Since the same quarter one year prior, revenues slightly increased by 2.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- SIAL's debt-to-equity ratio is very low at 0.11 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.32, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for SIGMA-ALDRICH CORP is rather high; currently it is at 55.78%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 18.97% is above that of the industry average.
- You can view the full analysis from the report here: SIAL Ratings Report