Shares of security and protection services provider
Tyco International Ltd.
) scaled a 52-week high of $42.20 on Feb 14, before closing the
trading session a notch lower at $41.93 for a healthy
year-over-year return of 29.7%. Tyco's share prices have steadily
been on the uptrend from Sep 2013.
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Despite its strong price appreciation, this Zacks Rank #3 (Hold)
stock still has enough fundamental strength to drive it upward.
The stock is currently trading at a forward P/E of 19.5x and has
a long-term earnings growth expectation of 13.9%.
Tyco reported strong first quarter fiscal 2014 results as both
revenues and earnings increased year over year. GAAP income from
continuing operations was $270 million or 57 cents per share, a
significant improvement from $159 million or 34 cents per share
in the year-ago quarter. The year-over-year rise was driven by
strong execution across all of its three segments, and
accelerated growth in service and products through focused
Revenues for the quarter increased 2% year over year to $2,647
million. Organic revenues improved 1.5% in the quarter, primarily
led by a 2% increase in products and a 2% improvement in service.
Tyco's acquisition pipeline is attractive and complements its
existing businesses. During the quarter, Tyco closed the
acquisition of Westfire, Inc., a leading fire installation and
services business in the mining and special hazard verticals in
the U.S., Chile and Peru. The acquisition is expected to generate
approximately $80 million in revenues in fiscal 2014 and provide
Tyco a solid platform for Latin American growth.
Moving ahead, Tyco believes that its strong balance sheet will
provide flexibility to continuously fund organic and inorganic
growth initiatives and maximize return for its shareholders.
Additionally, accretive acquisitions are expected to strengthen
the company's position by broadening its product and service
offerings in the long term.
Over the last 30 days, Tyco's earnings estimates for fiscal 2014
climbed higher on expectations of a solid earnings momentum. We
also envision an uptrend for the stock backed by its strong
Other Stocks to Consider
Stocks in the industry that warrant a look include
Hutchison Whampoa Ltd
), each of which carry a Zacks Rank #2 (Buy).