Precision Castparts Corp. Stock Buy Recommendation Reiterated (PCP)

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) -- Precision Castparts (NYSE: PCP) 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, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, increase in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

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Highlights from the ratings report include:
  • PCP's revenue growth has slightly outpaced the industry average of 6.7%. Since the same quarter one year prior, revenues rose by 13.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.21, which illustrates the ability to avoid short-term cash problems.
  • PRECISION CASTPARTS CORP has improved earnings per share by 8.9% 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, PRECISION CASTPARTS CORP increased its bottom line by earning $8.45 versus $7.02 in the prior year. This year, the market expects an improvement in earnings ($9.71 versus $8.45).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Aerospace & Defense industry average. The net income increased by 10.0% when compared to the same quarter one year prior, going from $307.30 million to $338.00 million.
  • Net operating cash flow has increased to $392.30 million or 28.87% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -10.50%.

Precision Castparts Corp. manufactures and sells metal components and products worldwide. Precision Castparts has a market cap of $27.2 billion and is part of the industrial goods sector and industrial industry. The company has a P/E ratio of 20.00, above the S&P 500 P/E ratio of 18.00. Shares are down 2.1% year to date as of the close of trading on Monday.

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

--Written by a member of TheStreet Ratings Staff.

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