TSC Ratings' Updates: Campbell Soup

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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 23.

We've downgraded ATP Oil & Gas(ATPG Quote) from hold to sell, driven by its unimpressive growth in net income, generally weak debt management, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Net income decreased by 96.5% to $1.64 million, from $46.9 million in the same quarter last year. ATP's debt-to-equity ratio is very high at 4.1, above the industry average, implying poor management of debt levels within the company. Its 0.8 quick ratio illustrates an inability to avoid short-term cash problems. Net operating cash flow fell 81.9% to $22.9 million compared with the year-ago quarter. Earnings per share declined steeply compared with the year-ago quarter, while fiscal-year earnings increased from $1.55 per share to $3.39 per share. We feel the company is likely to report an earnings decline in the coming year.

We've upgraded BlackRock(BLK Quote) from hold to buy, driven by its largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

The company's debt-to-equity ratio is very low at 0.09, below the industry average, implying successful management of debt levels. Its 35.5% gross profit margin is strong and has increased from the year-ago quarter. Net operating cash flow increased to -$126 million, while revenue fell by 24.1%. EPS declined steeply in the most recent quarter compared with the year-ago quarter. The company has suffered a decline in EPS over the past year, but we anticipate this trend will reverse over the coming year.