Energy, Utilities Upgraded: Ratings Changes

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BOSTON (TheStreet) -- TheStreet.com's stock-rating model upgraded Commerce Bancshares(CBSH Quote) to "buy."

The numbers: Second-quarter net income decreased 34% to $37 million and earnings per share fell 35% to 48 cents as revenue declined 3% to $295 million. The operating margin descended from 36% to 32% and the net margin dropped from 18% to 13%. Commerce has an adequate capital position, evident in its $424 million of reserves and tier-1 capital ratio of 11.4%. However, a debt-to-equity ratio of 1.2 is higher than ideal.

The stock: Commerce Bancshares has fallen 13% in 2009, underperforming major U.S. indices. The stock trades at a price-to-earnings ratio of 21, indicating a premium to the market, and offers a 2.5% dividend yield, less than the average of S&P 500 companies.

The model upgraded Motorcar Parts of America(MPAA Quote) to "hold."

The numbers: Fiscal first-quarter earnings dropped 60% to $1.2 million, or 10 cents a share, as revenue remained steady at $33 million. The operating margin deteriorated from 14% to 9% and the net margin fell from 9% to 4%. A quick ratio of 0.2 indicates weak liquidity. But the cash balance has doubled to $1.5 million since the year-earlier quarter. A debt-to-equity ratio of 0.3 reflects modest leverage.

The stock: Motorcar Parts has increased 31% in 2009, more than major U.S. indices. The stock trades at an expensive price-to-earnings ratio of 31 and doesn't pay dividends.

The model upgraded casino operator Penn National Gaming(PENN Quote) to "hold."

The numbers: Second-quarter net income decreased 23% to $29 million and earnings per share fell 36% to 27 cents as revenue declined 6% to $581 million. The operating margin declined from 18% to 15% and the net margin dropped from 6% to 5%. A quick ratio of 2 and $795 million of cash indicate ample liquidity. But a debt-to-equity ratio of 1.1 indicates higher-than-ideal leverage.