JPMorgan, Progressive: Ratings Changes

BOSTON (TheStreet) -- TheStreet.com's stock-rating model upgraded JPMorgan Chase(JPM Quote) to "buy."

The numbers: Third-quarter net income surged 581% to $3.6 billion and earnings per share swung from negative 6 cents to positive 80 cents. Revenue grew 31% to $30 billion. Its gross margin rose from 39% to 61% and its operating margin increased from 5% to 34%. The company is adequately capitalized, with $252 billion of cash. A debt-to-equity ratio of 4.2 reflects excessive leverage. The stock: JPMorgan has risen 49% this year, outpacing major U.S. indices. The stock trades at a price-to-earnings ratio of 39, indicating a premium to the market, but parity with financial service peers. The shares pay a 0.4% dividend yield.

The model upgraded insurance provider Progressive(PGR Quote) to "buy."

The numbers: The company swung to a third-quarter profit of $270 million, or 40 cents a share, from a loss of $684 million, or $1.03 a share, in the year-earlier period. Revenue grew 63% to $3.6 billion. Its gross and operating margins climbed from negative territory to 11%. A debt-to-equity ratio of 0.4 reflects conservative leverage.

The stock: Progressive has jumped 15% this year, beating the Dow Jones Industrial Average, but lagging the S&P 500 Index. The stock trades at a price-to-earnings ratio of 13, a discount to the market and insurance peers. The company doesn't pay dividends.

The model upgraded apparel designer Warnaco Group(WRC Quote) to "buy."

The numbers: Second-quarter net income fell 9% to $18 million and earnings per share dropped 29% to 40 cents. Revenue declined 9% to $456 million. Its gross margin was unchanged at 43% and its operating margin fell from 11% to 9%. A quick ratio of 1.3 demonstrates adequate liquidity. A debt-to-equity ratio of 0.3 is below the industry average, indicating restrained leverage.