TSC Ratings' Updates: Mattel

Atlanta-based Mueller Water Products (MWA Quote) was upgraded to hold from sell. The firm is a producer of various water infrastructure used in water distribution networks. 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 net income growth year-over-year has significantly exceeded that of the S&P 500 and the overall machinery industry. Net income increased by 1,661.5% over the same quarter one year prior, rising from -$1.30 million to $20.3 million.

Mueller's revenue growth trails the industry average of 16.9%. Since the same quarter one year prior, revenue slightly increased by 5.2%. Growth in the company's revenue appears to have helped boost its EPS.

The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the machinery industry and the overall market, Mueller Water Products' 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 Mueller is currently lower than what is desirable, coming in at 27.7%. 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.

We initiated Mueller with a sell rating on June 27, 2007.