AutoNation, Anadarko: Ratings Changes

BOSTON (TheStreet) -- TheStreet.com's stock-rating model upgraded automotive retailer AutoNation(AN) to "hold."

The numbers: The company swung to a third-quarter profit of $65 million, or 36 cents a share, from a loss of $1.4 billion, or $7.90 a share, in the year-earlier period. Revenue dropped 13% to $2.9 billion. AutoNation's gross margin increased from 17% to 18%, and its operating margin rose from 3% to 4%. A quick ratio of 0.3 reflects weak liquidity. A debt-to-equity ratio of 0.9 indicates reasonable leverage.

The stock: AutoNation has advanced 83% this year, beating major U.S. indices. The stock trades at a price-to-earnings ratio of 13, a discount to the market and auto retailers. The company doesn't pay dividends.

The model downgraded oil and gas company Anadarko Petroleum(APC) to "hold."

The numbers: Third-quarter profit plummeted 91% to $200 million, or 40 cents a share, as revenue fell 67% to $2 billion. Anadarko's gross margin decreased from 82% to 64%, and its operating margin declined from 58% to negative territory. The company holds $3.6 billion of cash, demonstrating adequate liquidity. A debt-to-equity ratio of 0.6 indicates conservative leverage.

The stock: Anadarko has risen 64% this year, beating major U.S. indices. The stock trades at a price-to-earnings ratio of 69, a premium to the market and oil and gas peers. The company has posted losses in the two previous quarters. The shares pay a 0.6% dividend yield.

The model downgraded insurer Axis Capital Holdings(AXS) to "hold."

The numbers: The company's third-quarter loss narrowed to $87 million, or 70 cents a share, from $240 million, or $1.79 a share, in the year-earlier quarter. Revenue declined 29% to $452 million. Axis's gross margin rose from negative territory to 6%, but its operating margin remained negative. The company has a stable financial position, with $1.7 billion of cash and $499 million of debt.

The stock: Axis Capital has fallen 1% this year, lagging behind major U.S. indices. The stock trades at a price-to-earnings ratio of 14, a discount to the market and insurers. The shares pay a 2.8% dividend yield.

The model downgraded gas provider Equitable Resources(EQT) to "hold."

The numbers: Third-quarter profit plummeted 97% to $2.9 million, or 2 cents a share, as revenue decreased 27% to $218 million. Equitable's gross margin dropped from 66% to 43%, and its operating margin fell from 55% to 20%. A quick ratio of 0.5 indicates weak liquidity. A debt-to-equity ratio of 0.9 is less than the industry average, demonstrating restrained leverage.

The stock: Equitable is up 25% this year, beating the Dow Jones Industrial Average and S&P 500 Index. The stock trades at a price-to-earnings ratio of 40, a premium to the market and gas peers. The shares pay a 2.1% dividend yield.

The model downgraded waste collector Republic Services(RSG) to "hold."

The numbers: Third-quarter net income jumped 36% to $121 million, but earnings per share fell 33% to 32 cents due to its higher share count. Revenue more than doubled to $2.1 billion. The company's gross margin increased from 40% to 42%, but its operating margin remained steady at 20%. A quick ratio of 0.5 reflects weak liquidity. A debt-to-equity ratio of 0.9 indicates reasonable leverage.

The stock: Republic Services has increased 5% this year, underperforming major U.S. indices. The stock trades at a price-to-earnings ratio of 40, a premium to the market and commercial service peers. The shares pay a 2.9% dividend yield.

-- Reported by Jake Lynch in Boston.

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