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.

Women's clothing retailer bebe stores(BEBE Quote) has been downgraded to a hold. While the company has enjoyed revenue growth and expanding profit margins, net income growth has been unimpressive and both the stock price performance and return on equity have been disappointing. bebe stores recently said fiscal year fourth-quarter income slipped 10% to $19.7 million, or 21 cents a share. Sales climbed 7% to $162.7 million, higher than the industry average of 5.8%. Same-store sales, or sales at stores open at least a year, fell 5.7% for the quarter. The company's current return on equity has slightly decreased from the same quarter one year prior. bebe had been rated a buy since January.

Thomson(TOC Quote), an information company, has been downgraded to a hold. The company has an impressive record of EPS growth, and revenue and net income have also been increasing. However, operating cash flow has been weak and profit margins have been poor. Thomson recently said second-quarter profit more than doubled over a year ago to $377 million, or 58 cents a share, significantly exceeding that of the media industry. Sales totaled $1.81 billion, up from $1.63 billion a year ago, but came in below the industry average of 14.4%. Shares have already risen in the past year, but TheStreet.com Ratings believes there is currently no conclusive evidence that warrants the purchase or sale of this stock. Thomson had been rated a buy since September 2005.