Stock Upgrades, Downgrades from TheStreet.com Ratings
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.
Department store operator Macy's (M) has been downgraded to hold. While the company's profit margins have been expanding, net income is deteriorating, debt management has been poor, and return on equity has been disappointing. On Thursday, Macy's said same-store sales, or sales at stores open at least a year, rose 2.4% in August, beating Wall Street's estimates, but the company warned that it expected comps to drop 1% to 3% in September. Last month, the company posted a second-quarter profit that was sharply lower than its original forecast, and it cut its guidance for the full year. Macy's second-quarter earnings fell to $74 million, or 16 cents a share, from $317 million, or 57 cents a share, as the company recorded more charges tied to integrating its 2005 acquisition of May Department Stores. Excluding charges, Macy's earned 29 cents a share. Macy's had been rated buy since September 2005.
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