GE, Constellation Brands: Ratings Upgrades

The stock: General Electric is down 16% in 2009, underperforming major U.S. indices. The stock trades at a cheap price-to-earnings ratio of 10 and offers a 3% dividend yield.

The model upgraded alcohol producer Constellation Brands(STZ) to "hold."

The numbers: Fiscal first-quarter earnings plummeted 85% to $6.5 million, or 3 cents a share, as revenue dropped 15% to $792 million. The operating margin rose from 14% to 15% and the net margin dipped below 1%. A quick ratio of 0.5 and just $17 million of cash indicate an inadequate liquidity position. And a debt-to-equity ratio of 1.9 demonstrates excessive leverage. We give Constellation Brands a financial strength score of 4.9 out of 10, less than the "buy"-list average of 7.

The stock: Constellation Brands has dropped 10% in 2009, underperforming major U.S. indices. The company doesn't pay dividends.

The model upgraded publisher and news provider Thomson-Reuters(TRI) to "buy."

The numbers: Second-quarter net income surged 82% to $315 million and earnings per share climbed 73% to 38 cents a share, restrained by a higher share count, as revenue increased 5% to $3.3 billion. The operating margin rose from 16% to 18% and the net margin jumped from 6% to 10%. A quick ratio of 0.8 indicates less-than-ideal liquidity. But a debt-to-equity ratio of 0.4 demonstrates conservative leverage.

The stock: Thomson-Reuters has ascended 10% in 2009, beating the Dow Jones Industrial Average and S&P 500 Index. The stock trades at a fair price-to-earnings ratio of 17 and offers a 3.5% dividend yield.

-- Reported by Jake Lynch in Boston.

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