Tyco International Beats on EPS but GAAP Results Lag

Tyco International (NYSE: TYC  ) reported earnings on July 31. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended June 29 (Q3), Tyco International missed slightly on revenue and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue grew and GAAP earnings per share dropped significantly.

Gross margins improved, operating margins dropped, and net margins dropped.

Revenue details
Tyco International logged revenue of $4.46 billion. The 10 analysts polled by S&P Capital IQ predicted sales of $4.54 billion on the same basis. GAAP reported sales were 3.9% higher than the prior-year quarter's $4.29 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $1.01. The 15 earnings estimates compiled by S&P Capital IQ predicted $0.93 per share. GAAP EPS of $0.52 for Q3 were 31% lower than the prior-year quarter's $0.75 per share. (The prior-year quarter included -$0.01 per share in earnings from discontinued operations.)

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 39.6%, 110 basis points better than the prior-year quarter. Operating margin was 10.6%, 150 basis points worse than the prior-year quarter. Net margin was 5.4%, 300 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $4.91 billion. On the bottom line, the average EPS estimate is $1.05.

Next year's average estimate for revenue is $17.96 billion. The average EPS estimate is $3.68.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 483 members out of 530 rating the stock outperform, and 47 members rating it underperform. Among 125 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 119 give Tyco International a green thumbs-up, and six give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Tyco International is outperform, with an average price target of $61.62.

Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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