TSC Ratings' Updates: Getty Realty

Revnue dropped by 4.1% since the same quarter a year ago but still managed to outperform the industry average, and EPS remained stable. Net income decreased by 18.3%, to $10.5 million, outperforming the S&P 500 and the REITs industry average.

We've downgraded restaurant company Luby's(LUB Quote) from hold to sell, driven by its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, poor profit margins and weak operating cash flow.

Luby's experienced a steep decline in EPS in the most recent quarter compared with the same quarter a year ago, and during the past fiscal year, it reported lower earnings of 8 cents vs. 41 cents in the prior year. For the next year, the market is expecting a further contraction in earnings to -16 cents. Net income decreased by 145.9%, to -2.2 million, underperforming the S&P 500 and the hotels, restaurants and leisure industry. Current return on equity is lower than its ROE from the same quarter one year prior, a clear sign of weakness.

Luby's gross profit margin is currently extremely low, coming in at 10%, having decreased from the same quarter the previous year, its net profit margin of -3.20% is significantly below the industry average. Net operating cash flow has significantly decreased to $1.65 million, or 75.84% compared with the same quarter last year.

We've downgraded food and grocery retailer Weis Markets(WMK Quote) from buy to hold. Strengths include its revenue growth, reasonable valuation levels and good cash flow from operations. However, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Revenue increased by 6.9% since the same quarter last year but underperformed the 18.4% industry average, and EPS declined. Weis Markets has no debt to speak of, but its quick ratio of 0.8 is somewhat weak and could be cause for future problems. The company's current return on equity has slightly decreased from the same quarter one year prior, implying a minor weakness in the organization. Weis Markets' gross profit margin is currently lower than what is desirable, at 27.9%, having decreased from the same quarter the previous year, and its net profit margin of 1.3% trails that of the industry average.

All ratings changes generated on Dec. 19 are listed below.

Ticker Company Current Change Previous BWTL Bowlin Travel Centers SELL Downgrade HOLD CPHL Castlepoint Holdings HOLD Upgrade SELL GMK Gruma SELL Downgrade HOLD GTY Getty Realty BUY Upgrade HOLD HDIX Home Diagnostics SELL Downgrade HOLD KTII K-Tron International HOLD Downgrade BUY LUB Luby's SELL Downgrade HOLD MRTN Marten Transport HOLD Downgrade BUY WMK Weis Markets 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.