TSC Ratings' Updates: BB&T

The following ratings changes were generated on Tuesday, Dec. 16.

We've upgraded American Italian Pasta(AIPC Quote), which produces and markets dry pasta in North America, to buy, driven by its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and notable return on equity. We feel these strengths outweigh the fact that the company has had generally poor debt management on most measures that we evaluated.

Revenue rose by 47.2% since the same quarter last year, outpacing the industry average of 35.5% and boosting EPS, which rose by 260% in the most recent quarter. During the past fiscal year, American Italian Pasta increased its bottom line by earning 98 cents vs. 29 cents in the prior year, and this year, the market expects further improvement to $1.62. Net income growth from the same quarter a year ago increased by 293.7%, significantly outperforming the S&P 500 and the food products industry. Current return on equity exceeded ROE from the same quarter a year ago, a clear sign of strength.

Shares surged by 233.8% over the past year, outperforming the S&P 500. Naturally, any stock can fall in a major bear market, but in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.

We've downgraded BB&T(BBT Quote), the holding company for Branch Banking and Trust, from buy to hold. Strengths include its expanding profit margins, good cash flow from operations and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including a decline in the stock price during the past year and feeble growth in the company's earnings per share.