Standard & Poor’s Ratings Services has upgraded its corporate credit rating on TRW Automotive Holdings Corp. (TRW) to “B+” from “B,” still four notches below investment grade. The upgrade was based on the company’s stronger performance in 2009.

Last week, Moody’s Investors Service (MCO) lifted the corporate family and probability of default ratings of TRW to “B2″ from “B3″ and of senior secured credit facilities to “Ba2″ from “Ba3″ based on the same reason. The overall ratings outlook was upgraded to “positive” from “stable” by the rating agency.

In the fourth quarter of 2009, TRW earned $168 million, or $1.40 per share, in sharp contrast to a loss of $74 million, or 73 cents per share, in the prior-year period. The profit was significantly better than the Zacks Consensus Estimate of a profit of 73 cents per share.

The improvement was driven primarily by a positive impact from higher sales, especially in Europe and the Rest of the World. Other contributing factors included restructuring and cost containment actions implemented by the company and lower raw material prices.

For full year 2009, TRW posted a profit of $137 million, or $1.02 per share. With this, the auto parts supplier has zoomed past the Zacks Consensus Estimate of 48 cents per share.

TRW also anticipates higher sales for 2010. The company expects sales in the range of $12.3 billion to $12.9 billion for the year, up from sales of $11.6 billion in 2009.

For 2010, the Zacks Consensus Estimate for TRW is a profit of $2.14 per share. Over the last 30 days, 4 out of 8 analysts covering the stock have revised the estimate upward, while only one has revised it downward. Therefore, we are maintaining our “Outperform” recommendation on the stock.

The stock price of TRW elevated 0.25% to $27.82 after the market closed on last Friday.

Zacks Investment Research

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