TSC Ratings' Updates: Microsoft

The following ratings changes were generated on Tuesday, Oct. 28.

We've downgraded mining equipment company Bucyrus International(BUCY) from buy to hold. Strengths include its robust revenue growth, impressive record of EPS growth and compelling growth in net income. Weaknesses include a generally disappointing performance in the stock itself and poor profit margins.

Revenue rose by 29.1% over the same quarter a year ago, surpassing the industry average of 10.4% growth and boosting EPS, which increased significantly. In fact, the company's EPS have grown over the past two years, and we feel this trend should continue. During the past fiscal year, Bucyrus increased its bottom line by earning $1.89 vs. $1.12 in the prior year, and this year, the market expects further improvement to $3.17. The current debt-to-equity ratio, 0.56, is low and is below the industry average, implying successful management of debt levels. The quick ratio, however, of 0.87 is somewhat weak and could be cause for future problems.

Bucyrus' gross profit margin of 29.6% is lower than desirable, but it has increased over the same period last year. Net profit margin of 9.9% compares favorably to the industry average. Shares are down 55.6% on the year, underperforming the S&P 500, but that doesn't necessarily tag the stock as cheap and attractive. The reality is that, based on its current price in relation to its earnings, Bucyrus is still more expensive than most of the other companies in its industry.

We've downgraded Danaher(DHR), which designs, manufactures and markets professional, medical, industrial and consumer products, from buy to hold. Strengths include its robust revenue growth, expanding profit margins and good cash flow from operations. Weaknesses include a decline in the stock price during the past year, deteriorating net income and disappointing return on equity.