Earnings Cheat Sheet: Does Tyco Have Better Days Ahead?

The Swiss industrial conglomerate Tyco International Ltd (TYC) is signaling that safety and security are showing signs of life for the company. Tyco’s largest subsidiary is electronic security company ADT, which saw its sales rise 8%, or $1.95 Billion, in today’s quarterly report. Roughly half of Tyco’s revenues are generated from overseas. Thus, the declining dollar has been a positive for Tyco’s top-line this quarter.

Earnings: Issued $.53 cents per share, or $266 million, relative to last year’s $.43 per share, or $205 million. Year-over-year, Tyco has improved its profit by 30%. Excluding certain items, Tyco delivered $.74 per share.

Revenue: Increased 4% to $4.49 billion.

Actual vs. Wall St. Expectations: Consensus analyst expectations called for earnings of $.66 per share on revenue of $4.44 billion. Tyco surprised to the upside on both fronts, earning and revenue estimates.

Notable Stats: Tyco completed a $1 billion share repurchase program announced in 2008.

Tyco announced the authorization of a new $1 billion program repurchase program.

In the first quarter of fiscal 2011, the company completed the sale of its European Waterworks business for proceeds of $267 million.

Did You Hear That: Tyco’s Chairman and CEO Ed Breen said in the latest press release, “Looking at the quarter, we are encouraged by strengthening business conditions…we strengthened the focus of our portfolio around our core security, fire and flow control platforms through a series of transactions highlighted by the Broadview acquisition and our decision to pursue a disposition of our Electrical & Metal Products business.”

Technicals: Shares of Tyco do not seem to be passing the $40 price level with conviction in 2010. Currently, shares of Tyco are above both the 50-day and 200-day moving averages. Since the Summer, Tyco’s stock has been achieving higher highs, even though the annual chart is quite choppy below.

Commentary: Tyco is purchasing its own stock, a vote of confidence to shareholders. Also, the company is spinning off businesses in order to unlock more shareholder value. Single-digit sales growth for a $20 Billion dollar company like Tyco is not so bad, but could be better. Investors most likely want to see Tyco’s growth rate increase for the shares to breakout of the high $30 range. Tyco pays a steady annual dividend of 2.2% to its shareholders.

Disclosure: No positions