Ford, Northern Trust: Ratings Changes

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BOSTON (TheStreet) -- TheStreet.com's stock-rating model upgraded automaker Ford(F Quote) to "hold."

The numbers: Ford swung to a second-quarter profit of $2.3 billion, or 69 cents, from a loss of $8.7 billion, or $3.89, a year earlier as revenue dropped 34% to $27 billion. Its gross margin rose from 6% to 18% and its operating margin climbed into positive territory. While Ford has $33 billion of cash, it has $133 billion of debt and $1.7 billion of quarterly interest expenses.

The stock: Ford shares have tripled this year as investors reward the company for avoiding bankruptcy. The stock's high 2.5 beta means it's very volatile.

The model upgraded oil and gas producer Concho Resources(CXO Quote) to "hold."

The numbers: Concho lost $33 million, or 39 cents a share, in the second quarter after losing $14 million, or 19 cents, in the year-earlier period. Revenue declined 7% to $127 million. Its operating margin plummeted from 61% to 23% and its net margin fell deeper into negative territory. Just $3 million of cash reserves and a quick ratio of 0.6 demonstrate weak liquidity. However, a debt-to-equity ratio of 0.5 indicates restrained leverage.

The stock: Concho has advanced 49% this year, outpacing major U.S. indices. The stock trades at a cheap price-to-earnings ratio of 13, but the company doesn't pay dividends.

The model upgraded investment manager Northern Trust(NTRS Quote) to "buy."

The numbers: Second-quarter net income surged 46% to $314 million, but earnings per share fell 1% to 95 cents because of its higher share count. Revenue dropped 21% to $1.1 billion. Its operating margin rose from 44% to 49% and its net margin increased from 15% to 28%. A debt-to-equity ratio of 2 suggests excessive leverage, but Northern Trust has $23 billion of cash reserves compared with $12 billion of debt, indicating outstanding liquidity.