TSC Ratings' Updates: Jack in the Box

TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.

The following ratings changes were generated on Thursday, April 9.

We've upgraded Applied Materials(AMAT Quote) from sell hold, driven by its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.

The debt-to-equity ratio of 0.03 is very low but above the industry average. The 1.3 quick ratio illustrates the ability to avoid short-term cash problems. Revenue declined 36.1% since the year-ago quarter. Return on equity also decreased, implying weakness. EPS declined in the most recent quarter compared with the year-ago quarter, and we feel that they should continue to decline in the coming year. Net income fell from $262.4 million in the year-ago quarter to -$132.9 million.

We've upgraded Arden Group(ARDNA Quote) from hold to buy, driven by its net income, revenue growth, notable return on equity, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Net income increased 0.7% compared with the same quarter last year, and revenue rose 2.6%. ROE also increased, signaling strength. The 40.3% gross profit margin has increased from the year-ago quarter, and the net profit margin of 5.7% is above the industry average. Net operating cash flow rose 30% to $8.7 million compared with the year-ago quarter.