Corrections Corp., Hospitality Properties: Ratings Changes

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BOSTON (TheStreet) -- TheStreet.com's stock-rating model upgraded prison operator Corrections Corp. of America(CXW Quote) to "buy."

The numbers: Second-quarter net income declined 13% to $33 million and earnings per share fell 7% to 28 cents, cushioned by a lower share count. Revenue grew 6% to $413 million. Its gross margin remained steady at 30%, but its operating margin fell from 19% to 18%. A quick ratio of 1.8 demonstrates ample liquidity. A debt-to-equity ratio of 1 indicates higher-than-ideal leverage.

The stock: Corrections Corp. of America is up 42% this year, beating major U.S. indices. The stock trades at a price-to-earnings ratio of 19, a slight discount to the market and security service peers. The company doesn't pay dividends.

The model upgraded hotel leaser Hospitality Properties(HPT Quote) to "buy."

The numbers: The company swung to a second-quarter profit of $51 million, or 46 cents a share, from a loss of $19 million, or 29 cents a share, in the year-earlier period. Revenue decreased 21% to $267 million. Its gross and operating margins remained steady at 27%. The trust holds just $7 million of cash, compared to $2.4 billion of debt. A debt-to-equity ratio of 0.8 indicates reasonable leverage.

The stock: Hospitality Properties is up 38% this year, more than major U.S. indices. The stock trades at a price-to-earnings ratio of 11, a discount to the market and real estate investment trust peers.

The model upgraded oil and gas service provider Oceaneering International(OII Quote) to "buy."

The numbers: Second-quarter net income dropped 8% to $48 million and earnings per share fell 6% to 87 cents. Revenue declined 10% to $451 million. Its gross margin rose from 19% to 31%, but its operating margin was unchanged at 16%. The company has adequate liquidity, demonstrated by a quick ratio of 1.3. A debt-to-equity ratio of 0.1 is below the industry average, indicating restrained leverage.