72
American Standard
American Standard has long enjoyed the benefit of being a conglomerate: Its strong segments offset the weak. Buoyed by a robust commercial building market, 2006 sales for its air-conditioning systems and services unit rose 12%, to $7 billion, from a year earlier. Its vehicle control systems unit, which makes high-tech brakes and other controls for commercial, luxury, and SUV markets worldwide, grew 10%. Those units helped offset weakness in the bath and kitchen business, which has been struggling amidst fierce competition and weak housing sales. Under CEO Fred Poses, who has slashed more than $1 billion of debt since taking over in 2000, the company plans to boost profits by splitting into three separate businesses. It will spin off its vehicle control business, and sell its bath and kitchen unit. The restructuring will leave the company, which will rename itself Trane, after its flagship air conditioner brand, with its higher-growth HVAC business as well as cash to buy back shares and pay down debt.
| Overall Grade | A- |
|
| Market Data | ASD | |
| Market Value (2/28/2007) |
$10.6 Billion |
|
| Profitability* | 36.0% | A- |
| Sales Growth Rate** | 9.2% | C |
| 12-Month Sales | $11.2 Billion |
|
| 12-Month Net Income | $0.5 Billion |
|
| Total Return | Past 12 Months35.9% | Past 36 Months50.9% |
| Economic Sector | Industrials | |
| Industry | Building Products | |
The overall sector letter grade reflects how the weighted average of the return on income, or return on equity, and sales growth grades compare with others in the same sector. For the overall grade as well as the ROE/ROI and sales growth grades, an "A" places a company in the top 7% of its sector and an "A-" in the top 14% of the sector. The actual ranking was done using the underlying numerical measures. Grades are for information only.
* For nonfinancial companies, three-year average pretax operating profit before interest and special items as a percentage of average invested capital. For financial companies, pretax profits as a percentage of average shareholder's equity.
*Three-year average annual sales growth based on the most recently reported 36 months, calculated using the least-squares method.
