TSC Ratings' Updates: VMware

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 Wednesday, June 10.

We've upgraded Ferellgas Partners(FGP Quote) from hold to buy, driven by its respectable return on equity which we feel is likely to continue. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Return on equity increased greatly compared with the same quarter last year, a signal of strength within the corporation. Revenue fell by 21.2%, though it outperformed the industry average of a 22.8% drop. EPS also decreased, by 12.7%, though we anticipate that the company's yearlong pattern of declining EPS will reverse over the coming year. Net income decreased by 6.5% to $32.9 million since the year-ago quarter but outperformed the S&P 500 and the gas utilities industry average. Ferrellgas' gross profit margin of 16.9% has managed to increase from the same period last year. The net profit margin of 5.9% trails the industry average.

We've upgraded Infosys Technologies(INFY Quote) from hold to buy, driven by its increase in net income, largely solid financial position with reasonable debt levels by most measures, notable return on equity, good cash flow from operations and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Net income increased by 3.2% to $321 million compared with the year-ago quarter, outperforming the S&P 500 but underperforming the IT services industry average. Infosys has no debt to speak of and a quick ratio of 5.7, which implies an ability to cover short-term cash needs. ROE has improved slightly compared with the same quarter last year. Net operating cash flow increased by 64.7% to $313 million. The 46% gross profit margin is strong but has decreased from the year-ago quarter. The 28.6% net profit margin compared favorably with the industry average.