NEW YORK (TheStreet) -- Shares of TRW Automotive Holdings Corp. (TRW) are soaring 7.00% to $97.80 as Germany's ZF Friedrichshafen AG is reportedly in early-stage buyout talks with the company, sources told Bloomberg.
ZF Friedrichshafen, which makes steering systems and chassis components, values TRW at around $11 to $12 billion although no specific price has been discussed, Bloomberg reported.
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TheStreet Ratings team rates TRW AUTOMOTIVE HOLDINGS CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate TRW AUTOMOTIVE HOLDINGS CORP (TRW) 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 revenue growth, solid stock price performance, increase in net income, attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- TRW's revenue growth has slightly outpaced the industry average of 3.4%. Since the same quarter one year prior, revenues slightly increased by 5.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 30.23% and other important driving factors, this stock has surged by 35.17% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, TRW should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the Auto Components industry average, but is less than that of the S&P 500. The net income increased by 22.8% when compared to the same quarter one year prior, going from $162.00 million to $199.00 million.
- The current debt-to-equity ratio, 0.47, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.81 is somewhat weak and could be cause for future problems.
- You can view the full analysis from the report here: TRW Ratings Report