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.
Matrix Service (MTRX - Get Report), an industrial services company, has been upgraded to buy. The company maintains a largely solid financial position with reasonable debt levels, good cash flow from operations, and impressive growth in revenue, earnings per share and net income. These strengths are expected to outweigh the company's low profit margins. Matrix recently posted a 110% increase in fiscal year 2008 first-quarter earnings to $6.34 million. Revenue climbed 27.2% to $161.3 million. Net operating cash flow has significantly increased by 213.67% to $1.21 million. Matrix Service had been rated hold since August.
Truckload carrier Celadon Group (CLDN) has been downgraded to hold. While the company enjoys a largely solid financial position with reasonable debt and valuation levels and acceptable revenue growth, it has also been marked by unimpressive net income growth, unsatisfactory return on equity and a generally disappointing stock performance. For the quarter ended June 30, net income dropped 19.5% from a year ago to $5.14 million. The company's current return on equity slightly decreased from the same quarter one year earlier. Celadon Group had been rated buy since October of 2005.