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TheStreet Ratings Top 10 Rating Changes

NEW YORK (TheStreet Ratings) -- Every trading day TheStreet Ratings' stock model reviews the investment ratings on around 4,800 U.S. traded stocks for potential upgrades or downgrades based on the latest available financial results and trading activity.

TheStreet Ratings released rating changes on 37 U.S. common stocks for week ending October 14, 2011. 16 stocks were upgraded and 21 stocks were downgraded by our stock model.

Rating Change #10

Harris Corporation (HRS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and unimpressive growth in net income.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 10.7%. Since the same quarter one year prior, revenues rose by 14.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • HARRIS CORP's earnings per share declined by 8.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HARRIS CORP increased its bottom line by earning $4.60 versus $4.28 in the prior year. This year, the market expects an improvement in earnings ($5.14 versus $4.60).
  • The change in net income from the same quarter one year ago has exceeded that of the Communications Equipment industry average, but is less than that of the S&P 500. The net income has decreased by 11.8% when compared to the same quarter one year ago, dropping from $151.40 million to $133.50 million.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, HRS has underperformed the S&P 500 Index, declining 18.28% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

Harris Corporation, together with its subsidiaries, operates as a communications and information technology company that serves government and commercial markets worldwide. It operates in three segments: RF Communications, Integrated Network Solutions, and Government Communications Systems. The company has a P/E ratio of 7.9, equal to the average telecommunications industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Harris has a market cap of $4.3 billion and is part of the technology sector and telecommunications industry. Shares are down 20.2% year to date as of the close of trading on Friday.

You can view the full Harris Ratings Report or get investment ideas from our investment research center.

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