TSC Ratings' Upgrades, Downgrades: TWC

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 Monday, May 5.

Marsh & McLennan MMC, a provider of advice and solutions in the areas of risk, strategy and human capital, has been upgraded to buy. For the fourth quarter, revenue increased 8.1% year over year to $2.93 billion, while earnings per share decreased to 17 cents from 36 cents.

The company's debt-to-equity ration of 0.49 is low but exceeds the industry average. On the other hand, its quick ratio of 1.43 is sturdy. For 2008, the market expects an improvement in full-year EPS to $1.55 from 98 cents in 2007. Shares have fallen 13% in the past year, netting the stock a price-to-earnings ratio of 28.57, which makes it substantially more expensive than others in its sector. We feel, however, that other strengths justify the buy rating. March & McLennan had been rated hold since Sept. 17.

Enbridge Energy Partners EEP, which owns and operates crude oil and liquid petroleum transportation and storage assets, has been upgraded to buy. For the first quarter, revenue rose 42% to $2.44 billion, and earnings per share grew to 99 cents from 40 cents. For 2008, the market expects an improvement in full-year EPS to $3.29 from $2.07 in 2007.

Net operating cash flow has significantly increased 81% to $276.2 million from the year-ago quarter. Gross profit margin is currently extremely low at 12%, and the net profit margin of 4.2% trails the industry average. Enbridge Energy Partners had been rated hold since April 1.

Concur Technologies CNQR, which provides employee expense management solutions, has been upgraded to buy. For the second quarter, revenue leaped 74% year over year to $53.7 million, and earnings per share increased to 8 cents from 3 cents. Net operating cash flow has increased by 65% to $17.8 million from the year-ago quarter.

The company's gross profit margin is very high at 74% and has increased from a year ago. However, its net profit margin of 6.9% trails the industry average. Although the debt-to-equity ratio of 0.12 is very low, it exceeds the industry average. Its quick ratio of 0.81 is somewhat weak and could be cause for future problems. With a price-to-earnings ratio of 130.38, the stock trades at a substantial premium to its peers. Concur Technologies had been rated hold since Feb. 1.

American Capital Strategies ACAS, a principal investment firm, has been downgrade to hold. Strengths such as robust revenue growth, a solid financial position and expanding profit margins are countered by feeble growth in earnings per share, deteriorating net income and disappointing return on equity. For the fourth quarter, revenue increased 45% to $354 million, while earnings per share swung to a loss of $1.27 from a profit of $2.10.

For 2008, the market is expecting a contraction of 26.5% in full-year EPS to $3.22. The debt-to-equity ratio is somewhat low at 0.75, implying successful management of debt levels. Net operating cash flow has increased 20% from the year-ago quarter to $183 million. With a price-to-earnings ratio of 7.31, the stock trades at a substantial discount to others in its sector. American Capital Strategies had been rated buy since TheStreet.com Ratings initiated coverage on May 2, 2006.

Time Warner Cable TWC, which provides video, data and voice service to residential and commercial customers, has been initiated with a hold rating. Strengths such as revenue growth, a reasonable valuation and good cash flow from operations are balanced by poor debt management.

For the first quarter, revenue increased 8% year over year to $4.16 billion, while earnings per share decreased to 25 cents from 28 cents. Net income has decreased by 12% year over year to $242 million. The company's return on equity is lags the industry average and that of the S&P 500. The debt-to-equity ratio of 0.54 is higher than the industry average. The company's quick ratio of 0.36 is very low and demonstrates very weak liquidity.

Additional ratings changes from May 5 are listed below.

Ticker	Company Name	Change	New Rating	Former Rating
ACAS	American Capital Strategies	Downgrade	Hold	Buy
AMCC	Applied Micro Circuits	Downgrade	Sell	Hold
CDTI	Clean Diesel Technologies	Downgrade	Sell	Hold
CNQR	Concur Technlologies	Upgrade	Buy	Hold
CVG	Convergys	Upgrade	Buy	Hold
FARO	Faro Technologies	Downgrade	Hold	Buy
HRLY	Herley Industries	Downgrade	Sell	Hold
KELYA	Kelly Services	Upgrade	Buy	Hold
EEP	Enbridge Energy Partners	Upgrade	Buy	Hold
LANC	Lancaster Colony Corp.	Downgrade	Hold	Buy
LSBI	LSB Financial	Downgrade	Sell	Hold
MMC	Marsh & McLennan	Upgrade	Buy	Hold
ECPG	Encore Capital	Upgrade	Hold	Sell
MOLX	Molex	Upgrade	Buy	Hold
NANO	Nanometrics	Upgrade	Hold	Sell
OPLK	Oplink Communications	Downgrade	Sell	Hold
RVSN	Radvision	Downgrade	Sell	Hold
SRI	Stoneridge	Upgrade	Buy	Hold
UTEK	Ultratech	Upgrade	Hold	Sell
UTHR	United Therapeutics	Upgrade	Buy	Hold
WTM	White Mountains Insurance	Downgrade	Hold	Buy
INDM	United America Indemnity	Downgrade	Hold	Buy
SXCI	SXC Health Solutions	Upgrade	Hold	Sell
WAVE	Nextwave Wireless	Initiated	Sell
TWC	Time Warner Cable	Initiated	Hold