Alliant, MetroPCS: Ratings Changes

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BOSTON (TheStreet) -- TheStreet.com's stock-rating model upgraded aerospace and defense contractor Alliant Techsystems(ATK Quote) to "buy."

The numbers: Fiscal first-quarter net income increased 28% to $69 million, or $2.09 a share, as revenue rose 8% to $1.2 billion. The operating margin advanced from 10% to 11% and the net margin expanded from 5% to 6%. Although a quick ratio of 1.2 demonstrates ample liquidity, Alliant has an excessive debt load, with $1.4 billion of obligations and $21 million of quarterly interest expenses. A debt-to-equity ratio of 1.9 confirms the high leverage.

The stock: Alliant is down 7% this year, underperforming major U.S. indices. The stock trades at a fair price-to-earnings ratio of 18, but does not pay dividends.

The model downgraded cell phone company MetroPCS Communications(PCS Quote) to "sell."

The numbers: Second-quarter revenue increased 26% to $860 million, but net income dropped 48% to $26 million, or 7 cents. The operating margin deteriorated from 20% to 15% and the net margin declined from 7% to 3%. A quick ratio of 1.8 indicates ample liquidity, but a debt-to-equity ratio of 1.7 reflects high leverage. We give MetroPCS a low financial strength score of 2.9 out of 10.

The stock: MetroPCS has fallen 41% this year, underperforming major U.S. indices. The stock trades at an expensive price-to-earnings ratio of 20 and does not pay dividends.

The model initiated coverage of Food Network-owner Scripps Networks Interactive(SNI Quote) at "hold."

The numbers: Second-quarter revenue fell 6% to $391 million, but earnings surged 49% to $80 million, or 49 cents. The net margin rose from 1% to 20%. Scripps has an ideal financial position with zero debt and ample cash reserves. The company has paid off $325 million since June 2008 and its cash balance stands at $52 million, which translates to a high quick ratio of 2.9.