Each business day, 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.
American Vanguard (AVD - Get Report), a specialty chemical maker, has been downgraded to hold. The company's strengths can be seen in multiple areas, including strong revenue growth, a largely solid financial position with reasonable debt levels and reasonable valuation levels. However, the stock's performance has been generally disappointing, the company's return on equity is inadequate and its operating cash flow is weak.
Third-quarter net sales increased 11% from a year ago to $56.6 million, while net income climbed 28% to $5.4 million. EPS totaled 20 cents a share, up from 16 cents a year ago. This company has reported somewhat volatile earnings recently, but TheStreet.com Ratings feels it is poised for EPS growth in the coming year. American Vanguard had been rated buy since September.