TSC Ratings' Updates: Cash America

KHD reported significant earnings per share improvement in the most recent quarter compared with 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, suggesting that the performance of the business is improving. During the past fiscal year, KHD increased its bottom line by earning $1.68 vs. $1.22 in the prior year. This year, the market expects an improvement in earnings to $2.15. The net income growth of 161.4% since the same quarter a year has significantly exceeded that of the S&P 500 and the construction and engineering industry.

Shares are down 69.3% on the year, underperforming the S&P 500. Naturally, the overall market trend is bound to be a significant factor, and 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 o other concerns, we feel the stock is still not a good buy right now.

We've downgraded investment management company W.P. Carey(WPC Quote) from buy to hold. Strengths include its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a decline in the stock price during the past year, disappointing return on equity and feeble growth in the company's earnings per share.

Revenue rose by 22.1% since the same quarter one year prior, but EPS declined. The current debt-to-equity ratio, 0.50, is low and is below the industry average, implying successful management of debt levels. Net operating cash flow has increased to $20.3 million, or 27.6% when compared with the same quarter last year, but the company is still growing at a significantly lower rate than the industry average of 232.31%. Return on equity has greatly decreased from the same quarter one year prior, a signal of major weakness within the corporation. On the basis of ROE, W.P. Carey outperformed the industry average but underperformed the S&P 500.

Shares are down 35.3% over the past year, likely due to the broader market decline, which was even sharper, and the company's weak EPS results. 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.

Other ratings changes include Red Lion Hotels(RLH Quote) and American WoodMark(AMWD Quote), both downgraded from hold to sell.

All ratings changes generated on Dec. 4 are listed below.

Ticker	Company	Current	Change	Previous
ALDA	Aldila	SELL	Downgrade	HOLD
AMWD	American Woodmark	SELL	Downgrade	HOLD
CFBK	Central Federal	HOLD	Upgrade	SELL
CPI	Capital Properties	HOLD	Downgrade	BUY
CPRT	Copart	HOLD	Downgrade	BUY
CSH	Cash America	HOLD	Downgrade	BUY
GPN	Global Payments	HOLD	Downgrade	BUY
KHD	KHD Humboldt	SELL	Downgrade	HOLD
RLH	Red Lion Hotels	SELL	Downgrade	HOLD
SAL	Salisbury Bancorp	SELL	Downgrade	HOLD
WPC	W.P.Carey	HOLD	Downgrade	BUY
ZONS	Zones	HOLD	Downgrade	BUY

Each business day, TheStreet.com Ratings updates its ratings on the stocks it covers. The proprietary ratings model projects a stock's total return potential over a 12-month period, including both price appreciation and dividends. Buy, hold or sell ratings designate how the Ratings group expects these stocks to perform against a general benchmark of the equities market and interest rates.

While the ratings model is quantitative, it uses both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and company earnings forecasts. Objective elements include volatility of past operating revenue, financial strength and company cash flows.

However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company.

For those reasons, we believe a rating alone cannot tell the whole story, and that it should be part of an investor's overall research.