TSC Ratings' Upgrades, Downgrades: Kinross

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, June 2.

URS Corp. (URS Quote), which provides engineering, construction and technical services, has been upgraded to buy. For the first quarter, revenue doubled year over year to $2.26 billion, and earnings per share improved to 60 cents from 58 cents. For 2008, the market expects full-year EPS to be in line with 2007 at $2.40. Net operating cash flow has increased 51% to negative $23.9 million from the year-ago quarter. With a price-to-earnings ratio of 19.67, the stock trades at a discount to others in its industry. URS Corp. had been rated hold since March 19.

American Financial Group (AFG Quote), a provider of property and casualty insurance, has been upgraded to buy. For the first quarter, revenue declined 6% year over year to $1.01 billion, and earnings per share fell to 64 cents from 92 cents. For 2008, the market expects an improvement in full-year EPS to $3.82 from $3.14 in 2007. Net operating cash flow has more than doubled year over year to $369.7 million. The debt-to-equity ratio of 0.33, is higher than the industry average. With a price-to-earnings ratio of 10.45, the stock trades at a slight discounts to others in its industry. American Financial Group had been rated hold since March 28.

ATP Oil & Gas (ATPG Quote), which produces oil and natural gas, has been upgraded to buy. For the first quarter, revenue increased 56% year over year to $226 million, and earnings per share improved to $1.29 from 89 cents. For 2008, the market expects an improvement in full-year EPS to $3.94 from $1.55 in 2007.

The gross profit margin is very high at 87% and has increased from the previous year. The net profit margin of 21% exceeds the industry average. Net operating cash flow has increased 50% year over year to $126.7 million. The firm also exceeded the industry average cash flow growth rate of 19.47% With a price-to-earnings ratio of 22.34, the stock trades at a premium to the industry average, but we feel other strengths justify the buy rating. ATP Oil & Gas had been rated hold since TheStreet.com Ratings initiated coverage on June 2, 2006.

Carlisle (CSL Quote), which manufactures and sells construction materials, has been downgraded to hold. Strengths such as revenue growth and a solid financial position are countered by deteriorating net income, disappointing return on equity and poor profit margins. For the first quarter, revenue increased 13% year over year to $708.3 million, and the company swung to a per-share loss of $1.02 from a profit of 54 cents. For 2008, the market is expecting a contraction in full-year EPS to $2.88 from $3.40 in 2007.

The company's debt-to-equity ratio of 0.44 is low, implying successful management of debt levels. Its quick ratio of 1.31 illustrates an ability to avoid short-term cash problems. The gross profit margin is rather low at 21% and has decreased from the same quarter the previous year. Along with this, the net profit margin of -8.80% is significantly below the industry average. Net operating cash flow has decreased 89% to $7.20 million from the year-ago quarter. In addition, when comparing to the industry average, the firm's growth rate is much lower. Carlisle had been rated buy since TheStreet.com Ratings initiated coverage on June 2, 2006.

Kinross Gold (KGC Quote), which mines and processes gold and silver ores, has been downgraded to hold. Strengths such as an increase in net income, robust revenue growth and a solid financial position are balanced by weak cash flow from operations.

For the first quarter, net income increased 3.5% year over year to $70.9 million, while earnings per share declined to 11 cents from 15 cents. Revenue increased 34% to $330.2 million in the same period. Return on equity has improved slightly when compared to the same quarter one year prior to 6.9%, but trails the industry average. Net operating cash flow has decreased 15% year over year to $76.3 million. Shares have climbed 47% in the past year, netting the stock a price-to-earnings ratio of 36.56, which places it at a premium to others in its industry. Kinross Gold had been rated hold since May 14, 2007.

Additional ratings changes from June 2 are listed below.

Ticker	Company Name	Change	New Rating	Former Rating
AFG	American Financial Group	Upgrade	Buy	Hold
AHT	Ashford Hospitality Trust	Upgrade	Hold	Sell
ATPG	ATP Oil & Gas	Upgrade	Buy	Hold
BLDP	Ballard Power Systems	Upgrade	Hold	Sell
BPAX	BioSante Pharmaceuticals	Downgrade	Sell	Hold
BSI	Blue Square Israel	Upgrade	Buy	Hold
BZC	Breeze-Eastern	Upgrade	Buy	Hold
CSL	Carlisle Companies	Downgrade	Hold	Buy
CSS	CSS INDUSTRIES INC	Downgrade	Hold	Buy
DOM	Dominion Resources Black Warrior Trust	Upgrade	Buy	Hold
DVLY	Deer Valley	Upgrade	Hold	Sell
FGP	Ferrellgas Partners	Upgrade	Buy	Hold
FRED	Fred's Inc.	Upgrade	Buy	Hold
GAS	Nicor	Upgrade	Buy	Hold
JAKK	Jakks Pacific	Downgrade	Hold	Buy
JCOM	J2 Global Communications	Upgrade	Buy	Hold
KGC	Kinross Gold	Downgrade	Hold	Buy
LEE	Lee Enterprises	Downgrade	Sell	Hold
MDCI	Medical Action Industries	Downgrade	Hold	Buy
MTZ	MasTec	Upgrade	Buy	Hold
NPLA	InPlay Technologies	Downgrade	Sell	Hold
OSBK	Osage Bancshares	Upgrade	Buy	Hold
PAET	Paetec Holding	Initiated	Sell
PDEX	Pro-Dex	Downgrade	Hold	Buy
PKY	Parkway Properties	Downgrade	Sell	Hold
QADI	QAD Inc.	Downgrade	Hold	Buy
RYAAY	Ryanair Holdings	Downgrade	Hold	Buy
SOAP	Soapstone Networks	Downgrade	Hold	Buy
SWTX	Southwall Technology	Upgrade	Hold	Sell
TCM	Tongjitang Chinese Medicines	Initiated	Hold
URS	URS Corp.	Upgrade	Buy	Hold