TSC Ratings' Updates: Krispy Kreme

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 Tuesday, June 16.

We've upgraded Avon Products(AVP) from hold to buy, driven by its notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had generally poor debt management on most measures that we evaluated.

Return on equity greatly increased compared with the same quarter lat year, a signal of significant strength within the corporation. Avon's gross profit margin is 64.8%, a decrease over the same period last year. The company's 5.4% net profit margin compared favorably with the industry average. Revenue fell by 12.9% since the year-ago quarter, and EPS decreased by 37.2%. The company has reported somewhat volatile earnings recently, and we think it's likely to report an earnings decline in the coming year. Net income fell 36.5%, from $184.7 million in the year-ago quarter to $117.3 million, outperforming the S&P 500 and the personal products industry average.

We've upgraded Exelon(EXC) from hold to buy, driven by its revenue growth, growth in earnings per share, increase in net income, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Revenue increased by 4.5% since the same quarter last year, and EPS improved by 22.7%. The company has demonstrated a two-year pattern of positive EPS growth, which we think will continue. Net income increased by 22.5% compared with the year-ago quarter, to $712 million from $581 million. Exelon's 40.8% gross profit margin is strong, having increased from the year-ago quarter, and its 15.1% net profit margin is above the industry average. Net operating cash flow increased by 171.6% to $2 billion compared with the prior-year quarter.