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TheStreet Open House

TSC Ratings' Updates: Allegiant

EPS improved significantly in the most recent quarter compared with the same quarter a year ago. During the past fiscal year, SJI reported lower earnings of $2.12 vs. $2.46 in the prior year. This year, the market expects an improvement in earnings to $2.30.

We've downgraded regulated electric and natural gas utility Integrys Energy Group (TEG) from buy to hold. Strengths include its robust revenue growth and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a decline in the stock price during the past year, deteriorating net income and weak operating cash flow.

Return on equity has improved slightly, which can be construed as a modest strength in the organization. Revenue rose by 51.9% since the same quarter last year, outpacing the industry average of 37.2% growth, but EPS declined steeply. The company has reported a trend of declining earnings per share over the past two years, but consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, it reported lower earnings of $2.81 vs. $3.54 in the prior year, and this year, the market expects an improvement to $3.38. Net operating cash flow has significantly decreased to -$734.60 million, or 1202.48% when compared with the same quarter last year.

Shares are down 18.3% on the year, reflecting the market's overall decline, which was actually deeper, and the sharp decline in Integrys' EPS. We do not see anything in this company's numbers that would change the one-year trend. Naturally, a bull or bear market could sway the movement of this stock.

Other ratings changes include Zoltec (ZOLT) and Mercantile Bancorp (MBR), both downgraded from hold to sell.

All ratings changes generated on Dec. 9 are listed below.

Ticker Company
Current
Change
Previous
ALGT
Allegiant Travel
BUY
Upgrade
HOLD
BDR
Blonder Tongue Labs
SELL
Downgrade
HOLD
CEBK
Central Bancorp
SELL
Downgrade
HOLD
CLB
Core Laboratories
HOLD
Downgrade
BUY
CXPO
Crimson Exploration
HOLD
Upgrade
SELL
CYAN
Cyanotech
HOLD
Upgrade
SELL
DGIT
DG FastChannel
HOLD
Downgrade
BUY
DSWL
Deswell Industries
SELL
Downgrade
HOLD
MBR
Mercantile Bancorp
SELL
Downgrade
HOLD
MCY
Mercury General
HOLD
Downgrade
BUY
NAII
Natural Alternatives
SELL
Downgrade
HOLD
NAVR
Navarre
SELL
Downgrade
HOLD
NICK
Nicholas Financial
SELL
Downgrade
HOLD
NOIZ
Micronetics
SELL
Downgrade
HOLD
NWLI
National Western Life
HOLD
Downgrade
BUY
NYM
Nymagic
SELL
Downgrade
HOLD
OZRK
Bank of the Ozarks
BUY
Upgrade
HOLD
PDEX
Pro-Dex
SELL
Downgrade
HOLD
PTI
Patni Computer Systems
HOLD
Upgrade
SELL
PZZI
Pizza Inn
SELL
Downgrade
HOLD
QCC
Quest Capital
HOLD
Upgrade
SELL
SD
Sandridge Energy
SELL
Initiated
SJI
South Jersey Industries
BUY
Upgrade
HOLD
SVT
Servotronics
HOLD
Downgrade
BUY
TEG
Integrys Energy Group
HOLD
Downgrade
BUY
VOCS
Vocus
HOLD
Upgrade
SELL
WINN
Winn-Dixie Stores
HOLD
Upgrade
SELL
ZOLT
Zoltek
SELL
Downgrade
HOLD

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.

This article was written by a staff member of TheStreet.com Ratings.
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