TSC Ratings' Updates: Vina Concha y Toro

The following ratings changes were generated on Thursday, Feb. 12

We've downgraded communications technology company Arris Group (ARRS) from hold to sell, driven by its deteriorating net income, disappointing return on equity, decline in the stock price during the past year and feeble growth in its earnings per share.

Net income fell from $9.6 million in the year-ago quarter to -$134 million in the most recent quarter, significantly underperforming both the S&P 500 and the communications equipment industry. Return on equity also greatly decreased, a signal of major weakness within the corporation. Earnings per share declined steeply, though the consensus estimate suggests that the company's two-year pattern of declining EPS should reverse in the coming year. Arris Group's debt-to-equity ratio of 0.3 is low but is higher than the industry average. Its 3.3 quick ratio is very high and demonstrated very strong liquidity.

Shares are down 22.6% over the past year, in part due to the market's overall decline, which was actually deeper. However, the fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

We've downgraded robot maker iRobot (IRBT) from hold to sell, driven by its generally disappointing historical performance in the stock itself, feeble growth in its earnings per share, disappointing return on equity and premium valuation.

Net income fell 73.8% compared with the year-ago quarter, to $5.4 million from $20.7 million, and ROE is also down, underperforming the industry and the S&P 500. iRobot experienced a steep decline in EPS of 74.1% in the most recent quarter compared with the year-ago quarter, and we expect the company's yearlong pattern of declining EPS to continue in the coming year.

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