Ace, Allstate, Lincare: Ratings Changes

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BOSTON (TheStreet) -- TheStreet.com's stock-rating model upgraded property and casualty insurer Ace (ACE Quote) to "buy."

The numbers: Second-quarter profit decreased 28% to $535 million, or $1.58 a share, as revenue dropped 8% to $3.5 billion. Its gross and operating margins declined from 21% to 19%. Ace has an adequate liquidity position, with $2.7 billion of cash, compared to $3.8 billion of debt. A debt-to-equity ratio of 0.2 is less than the industry average, indicating restrained leverage.

The stock: Ace has fallen 4% this year, trailing major U.S. indices. The stock trades at a price-to-earnings ratio of 15, a discount to the market and insurance peers. The shares offer a 2.4% dividend yield.

The model upgraded property and casualty insurer Allstate(ALL Quote) to "hold."

The numbers: Second-quarter profit grew more than tenfold to $389 million, or 72 cents a share, as revenue grew 15% to $8.5 billion. Its gross and operating margins climbed from negative territory to 7%. The company has a strong financial position, with $6.7 billion of debt and an equal amount of cash. A debt-to-equity ratio of 0.4 demonstrates reasonable leverage.

The stock: Allstate has declined 7% this year, lagging behind major U.S. indices. Prior to the second quarter, the company posted three straight quarterly losses. The shares offer a 2.6% dividend yield.

The model upgraded Lincare Holdings(LNCR Quote), a provider of respiratory therapy services, to "buy."

The numbers: Second-quarter net income fell 44% to $33 million and earnings per share dropped 38% to 49 cents. Revenue declined 11% to $380 million. Its gross margin fell from 52% to 47% and its operating margin decreased from 25% to 16%. A quick ratio of 1.6 reflects ample liquidity. A debt-to-equity ratio of 0.5 indicates conservative leverage.

The stock: Lincare Holdings is up 12% this year, outpacing the Dow Jones Industrial Average, but underperforming the S&P 500 Index. The stock trades at a price-to-earnings ratio of 13, a discount to the market and health care service peers. The company does not pay dividends.

The model upgraded regional airline SkyWest(SKYW Quote) to "buy."

The numbers: Second-quarter net income decreased 28% to $26 million, or 46 cents a share. Revenue declined 27% to $699 million. Its gross margin rose from 13% to 16% and its operating margin climbed from 8% to 9%. A quick ratio of 1.9 demonstrates ample liquidity. But a debt-to-equity ratio of 1.4 indicates excessive leverage.

The stock: SkyWest is down 3% this year, lagging behind major U.S. indices. The stock trades at a price-to-earnings ratio of 12, a discount to the market and airlines. The shares offer a 0.9% dividend yield.

The model upgraded UTi Worldwide(UTIW Quote), which provides shipping and freight services, to "hold."

The numbers: Fiscal second-quarter net income decreased 65% to $12 million and earnings per share fell 57% to 12 cents. Revenue fell 33% to $841 million. Its gross margin rose from 33% to 40% and its operating margin remained steady at 3%. A quick ratio of 1.2 indicates strong liquidity. A debt-to-equity ratio of 0.4 is below the industry average, demonstrating conservative leverage.

The stock: UTi Worldwide has advanced 5% this year, trailing major U.S. indices. The company does not pay dividends.

-- Reported by Jake Lynch in Boston.