Tyco International Ltd Stock Downgraded (TYC)

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 ( TheStreet) -- Tyco International (NYSE: TYC) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

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Highlights from the ratings report include:
  • TYC's revenue growth has slightly outpaced the industry average of 3.0%. 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. Despite an increase in cash flow, TYCO INTERNATIONAL LTD's cash flow growth rate is still lower than the industry average growth rate of 20.03%.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Commercial Services & Supplies industry. The net income has significantly decreased by 32.6% when compared to the same quarter one year ago, falling from $359.00 million to $242.00 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Commercial Services & Supplies industry and the overall market, TYCO INTERNATIONAL LTD's return on equity is below that of both the industry average and the S&P 500.
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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 9.8, equal to the average diversified services industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Tyco International has a market cap of $12.6 billion and is part of the services sector and diversified services industry. Shares are down 10.9% year to date as of the close of trading on Wednesday.

You can view the full Tyco International Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

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