Germany-based ZF Friedrichshafen plans to sell its stake in a steering business joint venture to Robert Bosch, which would allow it to acquire TRW Automotive, according to the Wall Street Journal. Selling its stake in the joint venture would reportedly help ZF avoid antitrust obstacles when it tries to acquire TRW.
An acquisition could be announced as soon as next week, according to the Journal. An acquisition would reportedly value TRW above $10 billion.
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 increase in net income, revenue growth, solid stock price performance, 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:
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Auto Components industry average. The net income increased by 6.8% when compared to the same quarter one year prior, going from $248.00 million to $265.00 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.9%. Since the same quarter one year prior, revenues slightly increased by 1.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 44.11% over the past year, a rise that has exceeded that of the S&P 500 Index. 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 current debt-to-equity ratio, 0.44, 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 0.84 is somewhat weak and could be cause for future problems.
- You can view the full analysis from the report here: TRW Ratings Report
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