TSC Ratings' Updates: Raytheon

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, June 4.

We've upgraded Federated Investors(FII Quote) from hold to buy, driven by its revenue growth, notable return on equity and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Revenue increased by 1.6% since the year-ago quarter, though EPS declined by 37%, and we feel the company is likely to report an earnings decline in the coming year. Return on equity rose from the same quarter a year prior, a sign of strength within the company. Federated's debt-to-equity ratio of 0.4 is below the industry average, though the quick ratio of 0.5 implies difficulty in paying short-term obligations.

Shares have fallen 30.1% over the past year, in part reflecting the overall decline in the broad market. The fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it is one of the factors that makes this stock an attractive investment.

We've upgraded LTC Properties(LTC Quote) from hold to buy, driven by its increase in net income, largely solid financial position with reasonable debt levels by most measures, 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.

Though net income is flat compared with the year-ago quarter, it greatly outperformed the S&P 500 and the REITs industry. LTC's debt-to-equity ratio of 0.08 is below the industry average, and the gross profit margin is 68.5%, though it has decreased from the same period last year. The net profit margin of 63% significantly outperformed the industry average. Revenue fell by 0.7% but outperformed the industry average. EPS also decreased, and net operating cash flow remained flat at $13.87 million, underperforming the instury average growth rate of 44.6%.