TSC Ratings' Upgrades, Downgrades: Palm

Also receiving a downgrade was Carmax (KMX Quote), which was shifted to a hold rating from buy. The used-car retailer purchases, refurbishes and sells used vehicles throughout the U.S. The primary factors that have impacted our rating are mixed with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks.

Carmax's revenue growth has slightly outpaced the industry average of 4.5%. Over the same quarter one year prior, revenue slightly increased by 1.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share. Net operating cash flow has slightly increased to $79.36 million, or 5.24% when compared to the same quarter last year. In addition, Carmax has also modestly surpassed the industry average cash flow growth rate of 0.36%.

Carmax's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.74 is somewhat weak and could be cause for future problems.

Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the specialty retail industry and the overall market, Carmax's return on equity is significantly below that of the industry average and is below that of the S&P 500. The gross profit margin for Carmax is currently extremely low, coming in at 13.7%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.3% trails that of the industry average. Carmax had been rated a buy since June 26, 2006.