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 company earnings forecasts. Objective elements include volatility of past operating revenue, financial strength and company cash flows.
Global energy company Royal Dutch Shell (RBS.B) has been downgraded to hold from buy. The company's performance is mixed, with little evidence to justify the expectation of either positive or negative stock price movement relative to other stocks. Its strengths include increased net income, revenue growth and EPS growth of 22.1% in the second quarter of 2007 compared with the same period last year.
As a counter to these strengths, Royal Dutch Shell demonstrates poor profit margins and its stock price has declined 1.74% in the past 12 months. The company had been rated buy since July 2007; before that, it had a hold rating since TheStreet.com Ratings initiated coverage in August 2006.