TSC Ratings' Updates: Cash America

We've downgraded Global Payments(GPN Quote), which provides payment processing and consumer money transfer services worldwide, from buy to hold. Strengths include its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we find that the stock has had a decline in price during the past year.

Revenue rose by 30.5% since the same quarter a year ago, outpacing the industry average of 16.2%. and boosting EPS. Although the debt-to-equity ratio of 0.19 is very low, it is currently higher than that of the industry average. Global Payments also has a quick ratio of 1.66, which demonstrates the ability of the company to cover short-term liquidity needs. Net income rose 32% compared with the same quarter a year ago, the S&P 500 and the IT services industry.

Shares are down 23.7% on the year, reflecting, in part, the market's overall decline. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

We've downgraded industrial plant engineering and equipment supply company KHD Humboldt Wedag International(KHD Quote) from hold to sell, driven by a generally disappointing historical performance in the stock itself.

KHD's gross profit margin is rather low at 22.7%, though it has increased from the same period last year. Its net profit margin of 15.2%, on the other hand, significantly outperformed the industry. Return on equity has improved slightly when compared with the same quarter one year prior, which can be construed as a modest strength in the organization. On the basis of ROE, KHD underperformed the construction and engineering industry but outperformed the S&P 500.