Stock Upgrades, Downgrades From TheStreet.com Ratings

TheStreet.com Ratings Staff

Each business day, TheStreet.com Ratings updates its ratings on the stocks it covers. The proprietary ratings model projects a stock's total return potential over a 12-month period, including both price appreciation and dividends. Buy, hold or sell ratings designate how the Ratings group expects these stocks to perform against a general benchmark of the equities market and interest rates.

While the ratings model is quantitative, it uses both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and company earnings forecasts. Objective elements include volatility of past operating revenue, financial strength and company cash flows.

However, our rating does not incorporate all of the factors that can alter a stock's performance.

For those reasons, we believe a rating alone can not tell the whole story, and should be part of an investors overall research.

Invesco(IVZ Quote), an investment manager, has been initiated with a buy rating. The company's strengths can be seen in several areas, such as expanding profit margins, good cash flow from operations, and growth in revenue, EPS and net income.

Third-quarter income climbed 67% to $170.6 million, or 21 cents a share, significantly exceeding the growth of the capital markets industry. Revenue climbed 22%, outpacing the industry average of 17.8%, to $720.3 million. Net operating cash flow has increased to $341.40 million or 14.37% over a year ago.

Last month Invesco moved its listing to the New York Stock Exchange from the London Stock Exchange. Although no company is perfect, there does not appear to be any significant weaknesses that are likely to detract from the generally positive outlook.

Clothing retailer The Men's Wearhouse(MW Quote) has been downgraded to hold. While the company has seen growth in revenue, EPS and net income, the stock has had a generally disappointing performance in the past year.

Third-quarter revenue increased 19.1% to $512.1 million, compared with the industry average of 6.6%. Net income totaled $37.1 million, or 69 cents a share, up from $31.8 million, or 58 cents a share, a year ago. Men's Wearhouse has demonstrated a pattern of positive EPS growth over the past two years and this trend is expected to continue.

However, the company's share price has done very poorly compared to where it was a year ago, falling 33.42%. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Men's Wearhouse had been rated buy since January 2006.

Zumiez(ZUMZ Quote), an outdoor apparel maker, has been downgraded to sell. The company's weaknesses can be seen in several areas, including its generally disappointing historical performance of the stock itself, unsatisfactory return on equity and weak operating cash flow. Zumiez's share price has slipped 34.69% from a year ago.

Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, investors should not assume that it can now be tagged as cheap and attractive.

The reality is that, based on its current price in relation to its earnings, Zumiez is still more expensive than most of the other companies in its industry. The company's current return on equity has slightly decreased from a year ago and ROE is below the industry average. The company had been rated hold since February.

Weingarten Realty Investors(WRI Quote), a real estate investment trust, has been downgraded to hold. While the company has experienced revenue growth, is reasonably valued and has expanding profit margins, it has also been marked by deteriorating net income, generally poor debt management and disappointing return on equity.

Third-quarter EPS totaled 44 cents a share, down from $1.15 a share a year ago. This company has reported somewhat volatile earnings recently. But, TheStreet.com Ratings believes it is poised for EPS growth in the coming year. Weingarten's current return on equity was down slightly from a year ago and is below the industry average. Weingarten Realty Investors had been rated buy since October.

Consolidated Graphics(CGX Quote), a commercial printer, has been downgraded to hold. The company maintains a largely solid financial position and has enjoyed revenue growth, but it has also been marked by poor profit margins, a generally disappointing stock performance and unimpressive growth in net income.

Fiscal second-quarter earnings fell 3% to 13.3 million, or 98 cents a share. Revenue increased 11% to $259.7 million. While the company has reported somewhat volatile earnings recently, it appears to be poised for EPS growth in the coming year. Consolidated Graphics' share price has fallen 25.36% from a year ago.

In one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper than most other stocks in its industry. But due to other concerns, the stock is still not considered a good buy. Consolidated Graphics had been rated buy since January 2006.

Additional rating changes are listed below.

Stock Upgrades, Downgrades
Company Name	Ticker	Change	New Rating	Former Rating
Consolidated Graphics	CGX	Downgrade	Hold	Buy
Mens Wearhouse	MW	Downgrade	Hold	Buy
MFB Corp	MFBC	Upgrade	Hold	Sell
Spherion	SFN	Downgrade	Hold	Buy
Weingarten Realty Trust	WRI	Downgrade	Hold	Buy
World Acceptance	WRLD	Downgrade	Hold	Buy
Columbia Bancorp	CBBO	Downgrade	Hold	Buy
Parke Bancorp	PKBK	Downgrade	Hold	Buy
Zumiez	ZUMZ	Downgrade	Sell	Hold
Invesco	IVZ	Initiation	Buy	n/a
Source: TheStreet.com

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