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TSC Ratings' Updates: Cadence

Revenue leaped by 66.4% since the same quarter a year ago, boosting EPS. Dorchester has a debt-to-equity ratio of zero and maintains a quick ratio of 30.32, which clearly demonstrates the ability to cover short-term cash needs. Its gross profit margin is currently very high at 93.9%, though it has decreased from the same period last year. Dorchester's net profit margin of 75.9% significantly outperformed the industry average.

Shares are down 23.7%, in part due to the market's overall decline. We do not see anything in this company's numbers that would change the one-year trend, though a bull or bear market could sway the movement of this stock.

We've downgraded Intuitive Surgical (ISRG), which engages in the design, manufacture and marketing of da Vinci surgical systems, from buy to hold. Strengths include its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, we find that the stock has had a generally disappointing performance in the past year.

Revenue leaped by 50.4% since the same quarter last year, outperforming the industry average of 15.3% and boosting EPS. Intuitive has a debt-to-equity ratio of zero and maintains a quick ratio of 3.96, which clearly demonstrates the ability to cover short-term cash needs. ROE has improved slightly when compared to the same quarter one year prior, which can be construed as a modest strength in the organization.

Shares are down 59.2% on the year, underperforming the S&P 500, but do not assume that Intuitive can now be tagged as cheap and attractive. Based on its current price in relation to its earnings, it is still more expensive than most of the other companies in its industry

We've upgraded SXC Health Solutions (SXCI) from sell to hold. Strengths include its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, we also find weaknesses including disappointing return on equity, poor profit margins and weak operating cash flow.

Revenue leaped by 1,332.2% since the same quarter a year ago, greatly outperforming the industry average of 3.7% growth and boosting EPS. Although SXC's debt-to-equity ratio of 0.25 is very low, it is currently higher than that of the industry average. The company maintains an adequate quick ratio of 1.12, which illustrates the ability to avoid short-term cash problems. SXC's gross profit margin is currently extremely low, at 2.40%, having decreased from the same quarter last year. Net operating cash flow has decreased to $3.56 million, or 46.05% when compared with the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

All ratings changes generated on Dec. 12 are listed below.

Ticker Company
Current
Change
Previous
AANB Abigail Adams National Bancorp
SELL
Downgrade
HOLD
ALE Allete
HOLD
Downgrade
BUY
BHIT BHIT
SELL
Downgrade
HOLD
CDNS Cadence Design Systems
SELL
Downgrade
HOLD
DMLP Dorchester Minerals
HOLD
Downgrade
BUY
DXPE DXP Enterprises
HOLD
Downgrade
BUY
FWV First West Virginia Bancorp
BUY
Upgrade
HOLD
GLOB Global Med Technologies
SELL
Downgrade
HOLD
IOT Income Opportunity Realty Investors
HOLD
Upgrade
SELL
ISRG Intuitive Surgical
HOLD
Downgrade
BUY
KSW KSW
BUY
Upgrade
HOLD
NNUP Nocopi Technologies
SELL
Downgrade
HOLD
PIP Pharmathene
SELL
Initiated
PTIE Pain Therapeutics
HOLD
Downgrade
BUY
SXCI SXC Health Solutions
HOLD
Upgrade
SELL
TNFG Terra Nova Financial Group
SELL
Downgrade
HOLD
TRCI Technology Research
HOLD
Upgrade
SELL
VVDL Vivid Learning Systems
HOLD
Upgrade
SELL

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.

Stock quotes in this article: ISRG, CDNS, SXCI 

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