FirstEnergy, Western Union: Ratings Changes

BOSTON (TheStreet) -- TheStreet.com's stock-rating model upgraded electric utility FirstEnergy(FE Quote) to "buy."

The numbers: Second-quarter revenue declined 7% to $3 billion, but net income increased 57% to $414 million, or $1.36 a share. Its gross margin rose from 30% to 32%, but its operating margin remained steady at 18%. A quick ratio of 0.4 indicates weak liquidity, but its cash balance has grown 12-fold to $900 million since the year-earlier period. A debt-to-equity ratio of 1.6 reflects excessive leverage.

The stock: FirstEnergy has fallen 3% this year, underperforming major U.S. indices. The stock trades at a price-to-earnings ratio of 11, a discount to the market and utilities. Ths shares offer a 4.7% dividend yield.

The model upgraded video-game retailer GameStop(GME Quote) to "buy."

The numbers: Second-quarter net income dropped 32% to $39 million, or 23 cents a share, as revenue declined 4% to $1.7 billion. Its gross margin rose from 27% to 29%, but its operating margin decreased from 6% to 4%. Just $197 million of cash and a quick ratio of 0.2 demonstrate weak liquidity. A debt-to-equity ratio of 0.2 indicates modest leverage.

The stock: GameStop is up 21% this year, beating the Dow Jones Industrial Average and S&P 500 Index. The stock trades at a price-to-earnings ratio of 11, a discount to the market and electronics retail peers. The company does not pay dividends.

The model upgraded information technology consultant SAIC(SAI Quote) to "buy."

The numbers: Fiscal second-quarter net income rose 13% to $123 million, or 31 cents a share. Revenue jumped 8% to $2.7 billion. Its gross margin remained steady at 15% and its operating margin rose from 7% to 8%. A quick ratio of 1.8 and $951 million of cash demonstrate strong liquidity. A debt-to-equity ratio of 0.5 reflects conservative leverage.