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.
Direct marketing company
(HHS - Get Report)
has been downgraded to a hold. While the company has a largely solid financial position with reasonable debt levels and notable return on equity, it is also struggling with deteriorating net income, poor profit margins and weak operating cash flow. Harte-Hanks recently reported disappointing second-quarter results, earning $22.9 million, or 31 cents a share, on revenue of $290.1 million. Analysts had expected earnings of 33 cents a share on revenue of $296.8 million. A year earlier, the company earned $30.2 million, or 37 cents a share, on revenue of $298.4 million. Harte-Hanks' gross profit margin is currently lower than what is desirable, coming in at 26.20% and down from a year ago. Its net profit margin of 7.90% trails that of the industry average. Harte-Hanks had been rated a buy since September 2005.