On Jan 3, Zacks Investment Research upgraded security and
protection services provider
Tyco International Ltd.
) to a Zacks Rank #2 (Buy) largely on the back of strong
Tyco's share prices have steadily been on the uptrend from Sep
2013. Despite its strong price appreciation, Tyco still has the
wherewithal that may further drive the stock up. The stock is
currently trading at a forward P/E of 13.9x and has long-term
earnings growth expectation of 18.9%.
Why the Upgrade?
Tyco reported strong fourth quarter fiscal 2013 results as both
revenues and earnings increased year over year. The
year-over-year rebound to earnings was driven by accelerated
growth in service and products along with increased benefits of
In the last reported quarter, Tyco reported GAAP income from
continuing operations of $162 million or 34 cents per share, a
significant improvement from loss of $629 million or $1.36 per
share incurred in the year-ago quarter. Revenues for the quarter
increased 1% year over year to $2,761 million, ahead of the Zacks
Consensus Estimate of $2,759 million. Organic revenues improved
1% in the quarter, primarily led by an 8% increase in products
and a 4% improvement in service.
Tyco's acquisition pipeline is attractive and complements its
existing businesses. The acquisitions are in line with the
company's strategy and are likely to provide solid long-term
returns to its shareholders. Additionally, the company
strengthened its service platform with strategic purchases and
accelerated growth rate in high-growth markets. 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.
Over the last 7 days, the earnings estimates for Tyco did not
show any upward or downward revision for 2013 and 2014. Although
there is a lacuna of estimate revisions, we envision an uptrend
for the stock backed by its strong growth potential.
Other Stocks to Consider
Some other players in the industry worth reckoning include
Raven Industries Inc.
), each carrying a Zacks Rank #2 (Buy).
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RAVEN INDS INC (RAVN): Free Stock Analysis
TYCO INTL LTD (TYC): Free Stock Analysis
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