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Amtrust, Rockwell Collins: Ratings Changes

TheStreet.com 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 total return performance.

TheStreet.com's stock-rating model upgraded Amtrust Financial Services (AFSI - Get Report) to "buy."

The numbers: Second-quarter net income increased 2% to $27 million, or 45 cents a share. Revenue grew 5% to $183 million. Its gross margin dropped from 32% to 25% and its operating margin fell from 23% to 20%. Amtrust is adequately capitalized, with $447 million of cash. But a debt-to-equity ratio of 1.2 indicates higher-than-ideal leverage.

The stock: Amtrust has advanced 11% this year, outperforming the Dow Jones Industrial Average, but underperforming the S&P 500 Index. The stock trades at a price-to-earnings ratio of 9, indicating a sizable discount to the market and insurance peers, and offers a 1.9% dividend yield.

The model upgraded racetrack owner Churchill Downs (CHDN - Get Report) to "buy."

The numbers: Second-quarter profit rose 5% to $31 million, or $2.20 a share, as revenue increased marginally to $180 million. Its gross margin fell from 40% to 38% and its operating margin decreased from 28% to 27%. Churchill has a weak liquidity position, evident in its quick ratio of 0.5. But its balance sheet holds minimal debt.

The stock: Churchill Downs has fallen 4% this year, trailing major U.S. indices. The stock trades at a price-to-earnings ratio of 22, which is a slight premium to the market, but equal to gaming peers. The company pays a 1.3% dividend yield.

The model upgraded aerospace and defense company Rockwell Collins (COL - Get Report) to "buy."

The numbers: Fiscal third-quarter net income fell 17% to $145 million, or 91 cents a share. Revenue declined 9% to $1.1 billion. Its gross margin decreased from 33% to 32% and its operating margin slid from 21% to 20%. A quick ratio of 0.8 reflects less-than-ideal liquidity, but a debt-to-equity ratio of 0.4 indicates a sound capital structure.

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SYM TRADE IT LAST %CHG
AFSI $59.75 -0.86%
COL $98.37 0.59%
CHDN $113.63 -0.36%
GVP $1.47 -2.65%
UBA $21.43 1.76%

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DOW 18,037.97 -42.17 -0.23%
S&P 500 2,108.92 -8.77 -0.41%
NASDAQ 5,060.2460 -31.8390 -0.63%

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