Each weekday, 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 forecasted company earnings. Objective elements include volatility of past operating revenue, financial strength and company cash flows.
Midwestern electric and gas utility Ameren (AEE - Get Report) has been downgraded to a hold from a buy. Although the company's earnings and revenue were up overall in the first quarter of fiscal 2007 compared with the year-earlier period, the latest report revealed weaknesses in some areas. Gas revenue declined 4.6% to $561 million from $589 million during that time period. Earnings from Ameren's Missouri regulated operations fell to 23 million from 35 million in the first quarter of fiscal 2006 because of costs incurred in the January ice storms. Ameren had been rated a buy since March 2005.
Another utility, Arizona-based Unisource Energy (UNS - Get Report) has been downgraded to a hold from a buy. The company's net income fell 70.6% in the first quarter of fiscal 2007 compared with the year-earlier period. TheStreet.com Ratings considers Unisource's gross profit margin of 22.9% to be rather low. Along with this, the company's net profit margin of 1.6% trails that of the industry average. UNS had been rated a buy since March 2006.Visual content provider Getty Images (GYI) has been downgraded to a hold from a buy. The company's earnings per share have remained basically flat over the past fiscal year, inching up to 63 cents per share in the first quarter of fiscal 2007 compared with 61 cents per share in the year-earlier period. Getty's stock price has tumbled 19.1% in the past 12 months. GYI had been rated a buy since February 2007. RBC Bearings (ROLL - Get Report) has been upgraded to a hold from a sell. The company makes precision plain, roller and ball bearings for use in industrial, aerospace and defense industries. RBC's revenue is growing faster than the industry average, increasing 13.6% in the third quarter of fiscal 2006 compared with the year-earlier period. Improved revenue seems to have boosted earnings per share, which jumped 51.7% during that same time period. TheStreet.com Ratings considers this company to be in a relatively solid financial position with low debt levels. RBC had been rated a sell since September 2006. Pennsylvania-based banking firm Sterling Financial (SLFI) has been downgraded to a hold from a buy. The company's return on equity declined slightly in the fourth quarter of fiscal 2006 compared with the year-earlier period. Sterling Financial's stock price has plunged 31.9% in just the past three months. SLFI had been rated a buy since May 2005. Some recent rating changes are highlighted below.
|TheStreet.com Ratings Stock Upgrades, Downgrades|
|Company Name||Ticker||Change||New Rating||Former Rating|
|First Security Group||FSGI||Upgrade||Hold||Sell|
|Source: TheStreet.com Ratings|