TSC Ratings' Updates: Stryker

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 11.

We've upgraded 99 Cents Only Stores(NDN Quote) from hold to buy, driven by its revenue growth, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Revenue rose by 13.3% since the same quarter last year, and EPS improved. We think that the company's yearlong trend of positive EPS growth should continue. Net income increased to $7 million from -$4.4 million in the prior-year quarter. The 39.3% gross profit margin also increased, though the 2.1% net profit margin trails the industry average. Net operating cash flow increased by 37.3% to $25.2 million.

We've upgraded Steris(STE Quote) from hold to buy, driven by its increase in net income, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, notable return on equity and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Net income increased by 6.5% compared with the same quarter last year, from $26.1 million to $27.8 million. Steris' debt-to-equity ratio of 0.3 is very low and below the industry average. Its quick ratio or 1.9 demonstrates an ability to cover shot-term liquidity needs. Return on equity had improved slightly compared with the year-ago quarter, and net operating cash flor rose 20.8% to $59.1 million.