TSC Ratings' Updates: Hansen Natural

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 Monday, May 11.

We've upgraded Emerson Electric(EMR Quote) from hold to buy, driven by its notable return on equity, reasonable valuation levels, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Return on equity improved compared with the same quarter a year ago. Emerson's gross profit margin of 39.2% has decreased from the year-ago period. Its 7.3% net profit margin trails the industry average. Revenue fell by 15.5% since the year-ago quarter, and EPS decreased. The 0.7 debt-to-equity ratio is high compared with the industry average. The company has a quick ratio of 0.9.

We've upgraded Hansen Natural(HANS Quote) from hold to buy, driven by its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in net income, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Revenue rose by 15.1% since the year-ago quarter, and EPS increased. The company maintains a quick ratio of 3.7. Net income increased 44.3% compared with the year-ago quarter, from $28.8 million to $41.6 million. The 53.3% gross profit margin has increased from the same quarter last year. The 17% net profit margin trails the industry average.