Tyco International (NYSE: TYC) is a leading provider of security products and services, fire protection and detection products and services, valves and controls, and other industrial products. The firm has operations in more than 60 countries, employing 118,000 worldwide. Customers include commercial and shipping enterprises, governmental entities, military forces, transportation systems, original equipment manufacturers, engineering contractors and homeowners. General Electric (NYSE: GE) and Honeywell International (NYSE: HON) are major competitors.
The company pleased investors last week, when it reported Q3 EPS of 88 cents and revenues of $5.21 billion. Analysts had been expecting 67 cents and $5.15 billion. Each of the firm's five divisions posted double-digit increases in operating income. Management also guided FY08 EPS to $2.97-$2.99 ($2.76 consensus).
I don't know about you, but I'm tired of watching all the red on the screen. Everyday we're faced with doomsday predictions facing the real estate market, the credit crunch, rising inflation, natural disasters, and my favorite, the Iranian threat facing the entire world.
Bloomberg is out with a story this morning that details the soaring arson rate in foreclosed homes around the U.S. As foreclosed homes are vacated, arson rates are on the rise. Not surprisingly, the highest arson rates are in the states with the highest foreclosure rates.
According to Bloomberg, "Last year, fires in vacant Nevada buildings increased 4 percent from a year earlier." Local officials think that number may grow this year. Bloomerg further states, "The state had the worst foreclosure rate in the U.S. during the first quarter, with one filing for every 54 households, according to data compiled by RealtyTrac Inc. The national rate was one filing per 194 households, analysts at the Irvine, California company said."
How can investors play this without taking out policies on their neighbors' houses? Investors may want to look at Tyco International (NYSE: TYC). Yes, that same company that had corporate execs dipping both hands into the cookie jar and spending on lavish parties, apartments, umbrella stands -- all during the excesses of the late 1990's. Well, the company is a leader in Fire and Safety products: everything from sprinkler systems in office buildings to its ADT division, a leading alarm monitoring firm.
The stock hasn't done much after the company broke itself up into three separate, publicly traded companies. It's pretty diversified in its products and does have a lot of exposure to the building industry -- so, a prolonged downturn in the housing industry could affect the firm. But it's got some world class products, a global sales and marketing infrastructure and is diversified in its businesses to capture global growth.
Hopefully, it won't crash and burn like the foreclosed, U.S. homeowner.
Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund. Author is long TYC stock.
After the FOMC tankeroo yesterday, would you have ever guessed that this would be such a great market day? Well it was. Oil falling almost $1.00 to $112.52 and gold back down to almost under $850/ounce are helping. It looks like traders are piling back on the "stuff and money" rather then commodities and a weak dollar. With the huge move today, you have to wonder where it all came from as the calls and the news was lighter than on many days. Below are the unofficial closing prices from 4:00 PM EST:
Apache Corporation (NYSE: APA) fell after a doubled net income failed to meet estimates. They generated a net income of $1.02 billion or $3.03 EPS compared to $492.9 million, or $1.47 EPS first quarter 2007. Average estimates by Thomson expected EPS of $3.06. Outlook for production in 2008 was also more conservative. Shares lost 6% to $126.41.
Tyco International (NYSE: TYC) is a leading provider of security products and services, fire protection and detection products and services, valves and controls, and other industrial products. The firm has operations in more than 60 countries, employing 118,000 worldwide. Customers include commercial and shipping enterprises, governmental entities, military forces, transportation systems, original equipment manufacturers, engineering contractors and homeowners. General Electric (NYSE: GE) and Honeywell International (NYSE: HON) are major competitors.
The company pleased investors last week, when it guided fiscal Q1 revenues to $4.87 billion. Analysts had been expecting $4.75 billion. The CEO noted strong operational performances across all business units. Management also boosted FY08 EPS guidance to $2.60-$2.70. That was up from a previous estimate of $2.50-$2.65 and compared well with the consensus Street view of $2.60. UBS subsequently reiterated its 'buy' rating on the issue. TYC shares popped on the news and have since moved into a bullish 'flag' consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the stock with six 'buys,' four 'holds' and one 'underperform.' Analysts see a 27% average annual growth rate through the next five years. The TYC Price to Sales ratio (0.98), Price to Book ratio (1.18) and Price to Free Cash Flow ratio (7.50) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 88% of the outstanding shares. The stock is one of those used to calculate the S&P 100 and S&P 500 Indexes. Over the past 52 weeks, it has traded between $31.01 and $55.17. A stop-loss of $32.40 looks good here. Note that the firm is expected to release Q1 results on February 5th, before the open.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
Dennis Kozlowski is everywhere these days. CNBC featured an interview with the former Tyco International Ltd. (NYSE: TYC) chief executive from jail where he spoke about the difficulty in doing hard time and how he's helping his fellow inmates earn their GEDs. A Wall Street Journaleditorial recently argued that Kozlowski was "railroaded" and that "living large isn't a crime."
Funny thing is that his former company seems to be doing just fine unwinding the empire that Kozlowski built. The conglomerate, which is splitting up into three separate companies, today reported better-than-expected third quarter results. Net income was $181 million, or 36 cents per share. Excluding one-time items, profit was $285 million, or 57 cents. Revenue jumped $5.03 billion. The results beat Wall Street consensus estimates of 55-cent profit on revenue of $4.97 billion.
Shares of Tyco are down $1.11, or 2.82%, to $38.20 because Tyco's yearly guidance for profit of $2.50 to $2.65 a share was below the $2.62 analysts had projected.
In a conference call with analysts, Kozlowski's replacement Ed Breen said the company was "cautiously optimistic" about its outlook for 2008, according to Bloomberg News. The company's revenue growth of 5.4%, which beat Tyco's estimates, was particularly impressive.
Shares of Tyco, which are down about 18% over the past year, are trading at near their 52-week low. Do some investors miss Kozlowski? Maybe. But if the world never learned about $6,000 shower curtains and tacky birthday parties, "Deal a Day Dennis" probably would have been forced to split up the company he cobbled together through acquisitions. Conglomerates, including General Electric Co. (NYSE: GE), are no longer the darlings that they once were on Wall Street.
Dennis Kozlowski, the former CEO of Tyco International Ltd. (NYSE: TYC) who gained notoriety for his infamous party sporting a statue of David spouting vodka from its penis, paid for in part by the company's shareholders, is back in the news.
The 60-year old former bigwig was sentenced to 8 1/3 to 25 years in prison in 2005, and his wife filed for divorce in January. He was served with the papers in prison. But now divorce talks between the two parties have broken down, and it is expected that Kozlowski will have to disclose his assets by October 15.
That could make shareholders happy, as they may be able to collect damages related to Kozlowski's looting during his tenure at the company.
According to Bloomberg, Kozlowski has paid $97 million restitution to Tyco, but still owes a $70 million fine, most of which is being held in escrow pending the outcome of his appeal. Roughly $600 million in assets held by Kozlowski were frozen by a court in 2002, and Tyco is still hoping to recover more money from its former CEO.
For an excellent overview of everything that went wrong at Tyco during Kozlowski's time at the helm, check out Greed Corporate Failure.
Tyco International Ltd. (NYSE:TYC) shares have performed dismally since it completed its spin-off of Tyco Electronics Ltd. (NYSE:TEL) and Covidien Ltd. (NYSE:COV). In fact, those have been poor performers as well. It isn't easy being one of the few naysayers ahead of a major event like this, but there are frequently too many conflicted reports out there. Does anyone expect that the large investment banking firms facilitating that deal or near-term financing would actually post a 'HIGH CAUTION" alert on any of the companies? Exactly.
Before the spin-off was implemented, I noted a "phantom premium" in Tyco's stock because the investing world was just too much in love with spin-offs, mergers, and private equity at the time. Interestingly enough, this shakeout may be going a bit too far as far as the overall values of the three units now. There is more data that needs to be crunched to verify this, but next week subscribers of the Special Situation Investing Newsletter will receive a newsletter with a tie of a company to one of the remaining ex-Tyco Newco stocks.
We ran a basket analysis this morning and showed that the ex-Tyco group as a whole was down twice as much as the general markets off of the July highs. That was also before the drop in all three stocks this morning. Mergers and special situations are not dead by any means. But now the funny-money deals are going to be a thing of the past. Deals might even have to make sense other than the greater fool theory from here on out. The good news is that the stupidity in mergers and special situations has been flushed out of the market and analysis doesn't have to worry about irrational conditions clouding up the picture.
Jon Ogg is a partner in 24/7 Wall St., LLC; he produces the Special Situation Investing Newsletter and does not own securities in the companies he covers.
Tyco's (NYSE: TYC) before the bell earnings announcement has all the wirehouses and analysts telling investors different stories. Due to a variety of "one-time charges," deciphering the true earnings per share for the company takes detective work.
The primary one-time charge for the company was the settlement of a class-action lawsuit related to the company's former CEO and convicted felon Dennis Kozlowski.
But analysts and companies tend to not count one-time charges simply because, as the name implies, they only occur one time. Due to this fact, the theory is that companies should back these charges out in order to give a more normalized and realistic figure.
Tyco's EPS figure came in at 55 cents per share ex-one time charges. This figure, compared to last year's 49 cents per share and above estimates for 48 cents per share seems to be a rather significant beat. However, there's still a variety of opinions on this figure -- one analyst report I read came out with an "EPS from continuing operations figure around 48 cents per share."
Basically, the Tyco earnings report is so confusing that you better really understand why you own this stock or you could get hurt. The company, even after breaking-up into three parts, remains a very interesting segment with many moving parts. As a result, it seems like every earnings report is loaded with accounting jargon, backing out certain figures, not counting certain figures, and so on. While I'm certainly not asserting that the company is doing anything wrong, I think there are certainly easier situations to analyze.
MOST NOTEWORTHY: Time Warner Cable , Solera Holdings (SLH) and BioDel (BIOD) filled this morning's initiation list:
Wachovia is positive on Time Warner Cable's (NYSE: TWC) competitive position, growth opportunities and valuation, starting shares off with an Outperform rating...
Solera (NYSE: SLH) was initiated at Deutsche Bank and Citigroup with a Hold rating; Goldman started Solera with a Buy rating and JP Morgan initiated shares with an Overweight rating...
BioDel (NASDAQ: BIOD) was initiated at Banc of America with a Buy rating, as the company's proprietary technology Viadel enables faster uptake of insulin that more closely mimic's the body's natural first phase insulin response. Leerink started shares with an Outperform and Morgan Stanley initiated shares with an Overweight rating...
The Tyco Healthcare unit is named Covidien Ltd. and is trading under a when-issued ticker (NYSE: COV) or on most symbols as "COV-WI"; Covidien traded down 0.5% to $46.25 yesterday.
The Tyco Electronics"unit is appropriately named Tyco Electronics and trades as (NYSE: TEL) or "TEL-WI"; Tyco Electronics closed down 4.25% yesterday at $37.15.
The remaining company for all of the security and fire company is remaining Tyco International Ltd. and keeping the "(NYSE: TYC)" ticker; shares traded down 0.67% to $34.09 yesterday.
Tyco International Ltd. (NYSE: TYC) opened at $32.61. So far today the stock has hit a low of $32.47 and a high of $33.00. As of 10:45, TYC is trading at $32.99, up $0.33 (1.0%).
After weathering a decline in 2006, this stock has made some slow but steady gains over the last nine months, hitting a 52-week high of $33.29 in February and showing support around $32 in recent months. Warren Buffett's 10 million shares of TYC make up just over half a percent of his portfolio. He picked up these shares near a high point for the stock in September 2005 and has not sold or purchased any further TYC shares since that time. Buffett's famed buy-and-hold strategy singles out stocks that the guru expects will have solid index-beating long-term performance. Thanks to last year's drop, TYC isn't trading much higher now than when he bought his shares in 2005, so now may not be a bad time to get in on the growth Buffett has been patiently expecting. Recent technical indicators for TYC have been bullish but deteriorating slightly, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider an October bull-put credit spread below the $30 range. TYC hasn't been below $30 for more than a day or two since November and has shown support around $32 recently. This trade could be risky if the stock's Q3 earnings (due out in August) disappoint, but even if that happens, TYC is a relatively steady company due to its diversity and has strong support around $30 that could protect this position.
Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls a position in TYC.
Here are some highlights from this past week's earnings coverage from BloggingStocks: 
I don't know about you, but I'm tired of watching all the red on the screen. Everyday we're faced with doomsday predictions facing the real estate market, the credit crunch, rising inflation, natural disasters, and my favorite, the Iranian threat facing the entire world.
Here are some highlights from this past week's 
$4.75 billion. The CEO noted strong operational performances across all business units. Management also boosted FY08 EPS guidance to $2.60-$2.70. That was up from a previous estimate of $2.50-$2.65 and compared well with the consensus Street view of $2.60. UBS subsequently reiterated its 'buy' rating on the issue. TYC shares popped on the news and have since moved into a bullish 'flag' consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Main market news: 
Before the bell: Stocks flat; TIF, FNM, TIVO, AAPL, GILD, JAS ...
The best housing stance for buyers, sellers? Staying put
Dillard's, Talbots rise despite wider Q2 losses
