Why Tyco (TYC) Is Gaining Today

NEW YORK (TheStreet) -- Tyco International (TYC) was gaining 1.6% to $40.31 on Friday following quarterly results that beat estimates in earnings.

The Switzerland-based security company posted earnings of 47 cents a share for its fiscal first quarter, beating the Capital IQ Consensus Estimate of 45 cents a share by 2 cents. Revenue increased 1.8% from the year-ago quarter to $2.65 billion, compared to the analyst estimates of $2.63 billion.

Tyco said organic revenue grew 1.5% in the quarter, with 2% growth in both services and product sales.

"We are off to a great start to the fiscal year. Our results this quarter were driven by strong execution across all three segments, resulting in 15% growth in earnings per share before special items," Tyco CEO George Oliver said in the press release.

TheStreet Ratings team rates TYCO INTERNATIONAL LTD as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate TYCO INTERNATIONAL LTD (TYC) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • TYC's revenue growth has slightly outpaced the industry average of 5.8%. Since the same quarter one year prior, revenues slightly increased by 1.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 125.00% and other important driving factors, this stock has surged by 30.32% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • TYC's debt-to-equity ratio is very low at 0.29 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.74 is somewhat weak and could be cause for future problems.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Commercial Services & Supplies industry average, but is greater than that of the S&P 500. The net income increased by 139.6% when compared to the same quarter one year prior, rising from -$419.00 million to $166.00 million.
  • Net operating cash flow has significantly decreased to $373.00 million or 50.66% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • You can view the full analysis from the report here: TYC Ratings Report

If you liked this article you might like

Qualcomm's $47 Billion Mega-Deal for NXP: Where It Stacks Up in History

Qualcomm's $47 Billion Mega-Deal for NXP: Where It Stacks Up in History

Cramer: Stocks That Defy the Fed's Gravitational Pull

Cramer: Stocks That Defy the Fed's Gravitational Pull

Tyco Merger Slows Johnson Controls

Tyco Merger Slows Johnson Controls

Jim Cramer -- Johnson Controls Has More Upside

Jim Cramer -- Johnson Controls Has More Upside

These 5 Blue-Chip Stocks Are Breaking Out in August

These 5 Blue-Chip Stocks Are Breaking Out in August