Stock Upgrades, Downgrades From TheStreet.com Ratings
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.
However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company.
For those reasons, we believe a rating alone cannot tell the whole story, and that it should be part of an investor's overall research.Compania Cervecerias Unidas (CU), a provider of beer to Chile and Argentina, has been upgraded to buy. For the fourth quarter, the company posted a year-over-year revenue increase of 36% to $423.8 million. EPS improved to $1.17 from 67 cents over the same interval. With a debt-to-equity ratio of 0.43, Compania Servecerias Unidas appears capable of successful debt management. At 62%, the company's gross profit margin is high and has increased year over year. Its net profit margin of 18% exceeds the industry average. The stock has risen faster than the S&P 500 in the past year, but with a price-to-earnings ratio of 13.46, it is cheaper than others in its industry. We see further upside for the stock. Compania Cervecerias Unidas had been rated hold since Feb. 7. Olin (OLN), a supplier of chlor alkali products, has been upgraded to buy. For the fourth quarter, the company's revenue leapt 64% year over year to $404.8 million. Earnings per share rose to 40 cents from 22 cents. For 2008, the market expects full-year EPS to improve to $1.78 from $1.62 in 2007. Olin's debt-to-equity ratio of 0.40 is below the industry average, implying successful management of debt levels. Its quick ratio of 1.32 illustrates the ability to avoid short-term cash problems. The stock's price has risen in the past year, outperforming the S&P 500. Despite the rise in price, with a price-to-earnings ratio (P/E) of 12.62, the stock is still cheaper than others in its industry, and we see further upside potential. Olin had been rated hold since Nov. 6. Trico Marine Services (TRMA), a provider of marine support vessels to the offshore oil and gas industries in Mexico and Brazil, has been upgraded to buy. For the fourth quarter, net income increased 88% year over year to $30.7 million. The current debt-to-equity ratio, 0.41, is low and lags the industry average, implying successful management of debt levels. The company also maintains a quick ratio of 3.60, which clearly demonstrates the ability to cover short-term cash needs. Net operating cash flow has significantly increased 58% to $42.2 million year over year. The firm exceeded the industry average cash-flow growth rate of 21.53%. With a P/E of 9.07, shares are cheaper than the industry average. Trico Marine Services had been rated hold since Feb. 4. MasterCard (MA), a credit card company, has been upgraded to hold. For the fourth quarter, revenue rose 28% to $1.07 billion. Earnings per share rose to $2.26 from 30 cents over the same period. The company's debt-to-equity ratio is very low at 0.08 and trails the industry average. Its quick ratio of 1.78 demonstrates an ability to cover short-term liquidity needs. Shares have surged by 90% over the past year. Thanks to the price increase, MasterCard now sports a P/E of 24.84, making it more expensive than the industry average. Net operating cash flow has decreased 74% to $52.2 million year over year. MasterCard had been rated sell since TheStreet.com initiated coverage on June 26, 2007. Tempur Pedic (TPX), a maker of bed products, has been downgraded to hold. Price competition in the industry weighs heavily on the company. In addition, demand for the company's highly priced "visco beds" may wane if the economy continues to slow. Although Tempur Pedic has been able to create its own niche in the market with signature pillows and beds, other companies have begun to launch visco offerings at lower prices. Also, as latex beds gain in popularity, Sealy (ZZ) has enhanced its focus on latex. This could create a disadvantage for Tempur Pedic in the long run. The company has significant debt on its books. Total debt as of the fourth quarter of 2007 nearly doubled to $602 million. Also, the total debt-to-equity ratio remained very high at 12.5. Based on Tempur Pedic's diverse business model and other growth measures, the company expects to achieve top-line growth of 7.2% to 12.6% in 2008; it also expects EPS between $2.03 and $2.20, up 16% to 26% from 2007. Tempur Pedic had been rated buy since Dec. 20, 2006. Additional ratings changes are listed below.
|Ticker||Company Name||Change||New Rating||Former Rating|
|WEST||WESTERN SIZZLIN CORP||Upgrade||Buy||Hold|
|COBR||COBRA ELECTRONICS CORP||Downgrade||Sell||Hold|
|CU||COMPANIA CERVECERIAS UNIDAS||Upgrade||Buy||Hold|
|DAIO||DATA I/O CORP||Downgrade||Hold||Buy|
|GTIM||GOOD TIMES RESTAURANTS INC||Downgrade||Sell||Hold|
|KEI||KEITHLEY INSTR INC||Upgrade||Hold||Sell|
|SCIL||SCIENTIFIC LEARNING CORP||Upgrade||Hold||Sell|
|TO||TECH OPS SEVCON INC||Upgrade||Buy||Hold|
|TOD||TODD SHIPYARDS CORP||Downgrade||Hold||Buy|
|WACLY||WACOAL HOLDINGS CORP||Upgrade||Buy||Hold|
|TPX||TEMPUR PEDIC INTL INC||Downgrade||Hold||Buy|
|TRMA||TRICO MARINE SERVICES INC||Upgrade||Buy||Hold|
|OCLS||OCULUS INNOVATIVE SCIENCES||Initiated||Sell|
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