TSC Ratings' Updates: Sears

Shares are down 58.5% on the year, underperforming the S&P 500. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.

We've initiated coverage on specialty retailer Ulta Salon Cosmetics & Fragrance(ULTA Quote) at sell, driven by its generally disappointing historical performance in the stock itself and poor profit margins.

Ulta's gross profit margin of 31.2% is low, having decreased from the same quarter last year, and its net profit margin of 2% trails the industry average. Its current debt-to-equity ratio, 0.60, is low and is below the industry average, implying successful management of debt levels. The quick ratio, however, of 0.12 is very weak and demonstrates a lack of ability to pay short-term obligations. On the basis of return on equity, Ulta has underperformed the industry average but outperformed the S&P 500.

EPS are up 12.5% in the most recent quarter compared with the same quarter a year ago. This year, the market expects an improvement in earnings to 49 cents from 31 cents. Shares are down 68.1% on the year, underperforming the S&P 500, but the stock is still more expensive (when compared to its current earnings) than most other companies in its industry.

Other ratings changes include Culp(CFI Quote) and GameTech(GMTC Quote), both downgraded from hold to sell.

All ratings changes generated on Dec. 8 are listed below.

Ticker	Company	Current	Change	Previous
BERK	Berkshire Bancorp	SELL	Downgrade	HOLD
CAST	ChinaCast Education	HOLD	Upgrade	SELL
CASTU	ChinaCast Education	HOLD	Upgrade	SELL
CCFH	CCF Holding	SELL	Downgrade	HOLD
CFI	Culp	SELL	Downgrade	HOLD
CNTY	Century Casinos	SELL	Downgrade	HOLD
CSE	CapitalSource	SELL	Downgrade	HOLD
GMTC	GameTech International	SELL	Downgrade	HOLD
HSWI	HSW International	SELL	Initiated
IDA	IdaCorp	BUY	Upgrade	HOLD
ITP	Intertape Polymer Group	SELL	Downgrade	HOLD
KINV	Kentucky Investors	SELL	Downgrade	HOLD
MLNK	ModusLink Global Solutions	SELL	Downgrade	HOLD
MTR	Mesa Royalty Trust	HOLD	Downgrade	BUY
RAVN	Raven Industries	HOLD	Downgrade	BUY
SAFM	Sanderson Farms	SELL	Downgrade	HOLD
SHLD	Sears Holdings	SELL	Downgrade	HOLD
SLI	SL Industries	SELL	Downgrade	HOLD
STON	StoneMor Partners	SELL	Downgrade	HOLD
TGB	Taseko Mines	SELL	Downgrade	HOLD
ULTA	Ulta Salon	SELL	Initiated
WST	West Pharmaceutical Services	HOLD	Downgrade	BUY
WXCO	WHX	SELL	Initiated

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.