Stock Upgrades, Downgrades From TheStreet.com Ratings: March 12
Updated from 7:18 a.m. EDT
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.The following ratings changes were generated on March 10. TiVo (TIVO), which provides technology and services for digital video recorders, has been upgraded to hold. The company shows solid stock price performance and impressive EPS growth. However, cash flow from operations has been weak. Powered by its strong earnings growth, shares have surged 29% over the past year. For the fourth quarter, TiVo narrowed its earnings per share loss to 6 cents from 20 cents a year ago. For 2008, the market expects an improvement in full-year EPS to a loss of 12 cents from a loss of 31 cents in 2007. Net operating cash flow has decreased 43% to $12.4 million year over year. This cash flow growth lags the industry average. TiVo had been rated sell since TheStreet.com Ratings initiated coverage on March 7, 2006. Fujifilm Holdings (FUJI), a maker of imaging and information products, has been downgraded to hold. Strengths such as revenue and EPS growth as well as a solid financial position are countered by disappointing stock-price performance. Second-quarter fiscal 2007 revenue rose 17% year over year to $6.67 billion and earnings per share rose to 39 cents from 31 cents. For the upcoming full year, the market expects an improvement in EPS to $2.22 from 56 cents this year. The company's debt-to-equity ratio is very low at 0.18, and its quick ratio of 1.33 is adequate. Shares have fallen 11% in the past year. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. Fujifilm Holdings had been rated buy since Dec. 24. Hartford Financial Services (HIG), which provides insurance and financial services through its subsidiaries, has been downgraded to hold. A solid financial position and notable return on equity are balanced by unimpressive growth in net income, weak operating cash flow and a disappointing stock-price performance. The company's debt-to-equity ratio is very low at 0.28, implying very successful management of debt levels. Return on equity has improved slightly to 15% year over year, and outperforms the industry average. For the fourth quarter, EPS dropped year over year to $1.88 from $2.42. The stock as a price-to-earnings ratio (P/E) of 7.26, making it cheaper than its industry peers. Hartford Financial services had been rated buy since TheStreet.com Ratings initiated coverage on March 7, 2006. Premier Exhibitions (PRXI), the salvor-in-possession of the Titanic wreck and the operator of the "Bodies" anatomy exhibitions, has been downgraded to hold. The company's strengths, such as its robust revenue growth, solid financial position and notable return on equity are weighed down by weak operating cash flow and a disappointing stock-price performance. For the third quarter of 2007, revenue more than doubled year over year to $16.7 million, and EPS improved to 8 cents from 7 cents in the same period. Premier Exhibitions has no debt to speak of and a quick ratio of 9.01, which clearly demonstrates the ability to cover short-term cash needs. The company's gross profit margin of 69% is rather high, but its net profit margin of 16% trails the industry average. Shares have tumbled 54% in the past year. The sharp decline has netted Premier Exhibitions a P/E of 10.57, which makes it much cheaper than other stocks in its sector. Due to other concerns, however, we feel the stock is still not a good buy right now. Net operating cash flow has decreased 26% to $5.7 million year over year. Premier Exhibitions had been rated buy since June 20, 2006. Canadian Solar (CSIQ), which designs, develops, manufactures and markets solar module products, has been initiated with a hold rating. The company's strengths include robust revenue growth, solid stock price performance and impressive EPS growth. However, it shows poor debt management and weak profit margins. For the fourth quarter, revenue leaped year over year to $127.5 million from $24.4 million, and EPS swung to a profit of 20 cents from a loss of 26 cents. Shares have surged 96% in the past year. The company's return on equity significantly trails that of both the industry average and the S&P 500. Moreover, its gross profit margin of 12% is very low, and its net profit margin of 4.3% is below the industry average. Canadian Solar's debt-to-equity ratio of 1.06 is higher than that of others in its sector, but its quick ratio of 1.86 is strong. Additional ratings changes from March 10 are listed below.
|Ticker||Company Name||Change||New Rating||Former Rating|
|ADPI||AMERICAN DENTAL PARTNERS INC||Downgrade||Sell||Hold|
|BLG||BUILDING MATERIALS HLDG CP||Downgrade||Sell||Hold|
|ABV.C||CIA DE BEBIDAS DAS AMERICAS||Upgrade||Buy||Hold|
|ERF||ENERPLUS RESOURCES FUND||Downgrade||Hold||Buy|
|BUSE||FIRST BUSEY CORP||Downgrade||Hold||Buy|
|FSBK||FIRST SOUTH BANCORP INC/VA||Downgrade||Hold||Buy|
|FUJI||FUJIFILM HLDGS CORP||Downgrade||Hold||Buy|
|HIG||HARTFORD FINANCIAL SERVICES||Downgrade||Hold||Buy|
|ISLE||ISLE OF CAPRI CASINOS INC||Downgrade||Sell||Hold|
|OME||OMEGA PROTEIN CORP||Upgrade||Buy||Hold|
|SCSS||SELECT COMFORT CORP||Downgrade||Sell||Hold|
|USMO||USA MOBILITY INC||Downgrade||Sell||Hold|
|PRXI||PREMIER EXHIBITIONS INC||Downgrade||Hold||Buy|
|LEGC||LEGACY BANCORP INC||Upgrade||Hold||Sell|
|CSIQ||CANADIAN SOLAR INC||Initiated||Hold|
|RNIN||WIRELESS RONIN TECHNOLOGIES||Initiated||Sell|
|TSL||TRINA SOLAR LTD -ADR||Initiated||Sell|
|MSBF||MSB FINANCIAL CORP||Initiated||Hold|
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