TSC Ratings' Updates: ImClone
Also downgraded to hold from buy was Wesco International (WCC). The Pittsburgh-based company is a distributor of electrical construction products. The primary factors that have impacted our rating are mixed -- some indicating strength and some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks.
The company's revenue growth significantly trails the industry average of 63.9%. Since the same quarter one year prior, revenue slightly increased by 4.6%, which appears to have helped boost EPS.
Wesco has improved EPS by 13.1% in the most recent quarter compared to the same quarter last year. The company has demonstrated a pattern of positive earnings per share growth over the past two years, and we feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, Wesco increased its bottom line by earning $5.03 a share, vs. $4.14 a share in the prior year. This year, the market expects an improvement in earnings per share ($5.12, vs. $5.03).
Even though the current debt-to-equity ratio is 1.11, it is still below the industry average, suggesting that this level of debt is acceptable within the overall trading companies and distributors industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.77 is weak.Wesco's stock share price has done very poorly compared to where it was trading a year ago: Despite any rallies, the net result is that it is down 27.1%, which is also worse that the performance of the S&P 500. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now. The gross profit margin for Wesco is rather low; currently it is at 19.6%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.8% trails that of the industry average. Wesco had been rated a buy since May 6. Additional ratings changes from Tuesday are listed below.
|Ticker||Company Name||Change||New Rating||Former Rating|
|BCAR||Bank of the Carolinas||Downgrade||Sell||Hold|
|CMED||China Medical Technologies||Upgrade||Buy||Hold|
|CPBR||ClearPoint Business Resources||Initiated||Sell|
|CTB||Cooper Tire & Rubber||Downgrade||Sell||Hold|
|HE||Hawaiian Electric Industries||Downgrade||Hold||Buy|
|HEP||Holly Energy Partners||Downgrade||Hold||Buy|
|LINC||Lincoln Educational Services||Upgrade||Buy||Hold|
|REP||Repsol YPF SA||Downgrade||Hold||Buy|
|SBLK||Star Bulk Carriers||Initiated||Hold|
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