TSC Ratings' Updates: Aeropostale

We've downgraded IBM(IBM Quote) from buy to hold. Strengths include its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including generally poor debt management and weak operating cash flow.

IBM has improved earnings per share by 22.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years, which we feel should continue. During the past fiscal year, IBM increased its bottom line by earning $7.24 vs. $6.09 in the prior year. This year, the market expects an improvement in earnings to $8.75. Net income increased by 19.6%, to $2,823 million, compared with the same quarter a year ago, outperforming the S&P 500 but underperforming the computers and peripherals industry average. Net operating cash flow has decreased to $3,739.00 million or 16.55% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower. The debt-to-equity ratio of 1.25 is relatively high when compared with the industry average, suggesting a need for better debt level management. IBM also maintains a poor quick ratio of 0.78, which illustrates the inability to avoid short-term cash problems.

We've downgraded Masimo(MASI Quote), engages in the development, licensing, and marketing of advanced signal processing technologies and products for the noninvasive monitoring of vital signs, from hold to sell, driven by its premium valuation and decline in the stock price during the past year.