Tyco (NYSE:TYC) continues to be a confounding conglomerate. Plenty of industrial conglomerates like United Technologies (NYSE:UTX), Honeywell (NYSE:HON), Danaher (NYSE:DHR), and General Electric (NYSE:GE) are doing better, though that might be evidence that Tyco has more room for improvement. All the same, barring a real discount in the stock price, this Fool sees no reason to get too eager.

Third-quarter results released today saw sales up a bit more than 5% this quarter. By the standards of conglomerates, it was an exceptionally clean top-line result, with few acquisitions or other adjustments to obscure the underlying organic performance. Revenue growth was strongest in the electronics business and weakest in the health-care business.

Margins were less promising. though. Adjusting for some items, operating income fell about 10% from last year. Though units like the engineered products business did well (after adjusting for a charge), the health-care business continues disappoint. True, many large health care companies aren't really lighting it up these days. I still can't help thinking that this business remains a sorry underperformer for Tyco.

All that said, help may yet still be on the way. The company sold its underperforming printed-circuit-board business to TTM Technologies (NASDAQ:TTMI), ending up with $226 million in cash to show for it. (Fellow Fool Anders Bylund explains the implications of that deal here.) Additionally, Tyco continues to buy back stock and prepare for an eventual breakup of the business.

Though the shares do trade below what I consider fair value, why shouldn't they? The company doesn't produce the return on capital of Danaher or United Technologies, nor the growth of many other rival industrial conglomerates. Simply put, a company that underperforms its peers shouldn't be valued as highly. So while I understand that many value investors like Tyco at these prices, I can't see any reason to bump it up toward the top of my watch list today.

For more Foolish thoughts on conglomerates:

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).