Tyco International Beats Estimates But Has a Big Earnings Drop

Tyco International (NYSE: TYC  ) reported earnings on April 26. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 29 (Q2), Tyco International met expectations on revenues and beat expectations on earnings per share.

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

Margins dropped across the board.

Revenue details
Tyco International notched revenue of $2.61 billion. The 11 analysts polled by S&P Capital IQ predicted revenue of $2.59 billion on the same basis. GAAP reported sales were 40% lower than the prior-year quarter's $4.35 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 $0.42. The 14 earnings estimates compiled by S&P Capital IQ averaged $0.39 per share. Non-GAAP EPS of $0.42 for Q2 were 51% lower than the prior-year quarter's $0.86 per share. (The prior-year quarter included -$0.01 per share in earnings from discontinued operations.) GAAP EPS of $0.15 for Q2 were 79% lower than the prior-year quarter's $0.70 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 35.9%, 260 basis points worse than the prior-year quarter. Operating margin was 5.6%, 770 basis points worse than the prior-year quarter. Net margin was 2.8%, 470 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $2.73 billion. On the bottom line, the average EPS estimate is $0.50.

Next year's average estimate for revenue is $10.73 billion. The average EPS estimate is $1.83.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 485 members out of 531 rating the stock outperform, and 46 members rating it underperform. Among 151 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 145 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 $32.64.

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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 position in any of the stocks mentioned. 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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