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TSC Ratings' Updates: Star Gas

We've downgraded Tufco Technologies (TFCO), which provides integrated manufacturing services, from hold to sell, driven by its generally disappointing historical performance in the stock itself, feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and poor profit margins.

Net income decreased by 94.6%, from $520,000 to $30,000, since the same quarter a year ago, underperforming the S&P 500 and the commercial services and supplies industry. The company's current return on equity has slightly decreased from the same quarter one year prior, implying a minor weakness in the organization and underperforming the industry and the S&P 500. Tufco's 4.3% gross profit margin is extremely low, having decreased from the same quarter last year, and its net profit margin of 0.1% trails the industry average.

Tufco has experienced a steep decline in EPS or 90.9% in the most recent quarter compared with the same quarter a year ago, continuing a two-year pattern of declining EPS. During the past fiscal year, Tufco reported lower earnings of 13 cents versus 21 cents in the prior year. Shares are down 45.8% on the year, underperforming the S&P 500, but don't assume that the stock can now be tagged as cheap and attractive. Based on its current price in relation to its earnings, Tufco is still more expensive than most of the other companies in its industry.

All ratings changes generated on Dec. 22 are listed below.

Ticker
Company
Current
Change
Previous
ATHN
AthenaHealth
HOLD
Upgrade
SELL
CRR
Carbo Ceramics
HOLD
Downgrade
BUY
ELP
Copel
HOLD
Downgrade
BUY
FSI
Flexible Solutions International
HOLD
Upgrade
SELL
SGC
Superior Uniform Group
HOLD
Downgrade
BUY
SGU
Star Gas Partners
SELL
Downgrade
HOLD
TFCO
Tufco Technologies
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.

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