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Analysts' Actions: Brinker, Finish Line, Open Text, Procter & Gamble

Stocks in this article: PG EAT OTE FINL

NEW YORK (TheStreet) -- RATINGS CHANGES

Brinker International (EAT) was downgraded at Wunderlich to hold from buy. Twelve-month price target is $52. Company could face increased competition, Wunderlich said.

Finish Line (FINL) was downgraded at Sterne Agee to neutral from buy. Estimates were also cut, as trends appear to be shifting toward lower-priced shoes, Sterne Agee said.

H&R Block (HRB) was upgraded to buy at TheStreet Ratings.

How Will This Analyst Downgrade Affect Procter & Gamble Today?

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Kohl's (KSS) was downgraded to hold at TheStreet Ratings.

Open Text (OTEX) was downgraded at RBC Capital to sector perform from outperform. Twelve-month price target is $55. Valuation call, as the stock is up 38% over the past year, RBC Capital said.

Procter & Gamble (PG) was downgraded at Wells Fargo to market perform from outperform. Estimates were also cut, given a lack of progress seen in management's offers, Wells Fargo said.

Editor's note: To see analysts' stock comments and changes to price targets and earnings estimates, go to "Street Notes" which is available only to Real Money subscribers. To find out how to become a subscriber, please click here.

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Now let's look at TheStreet Ratings' take on some of these stocks. TheStreet Ratings team rates BRINKER INTL INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate BRINKER INTL INC (EAT) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations, increase in stock price during the past year and growth in earnings per share. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • EAT's revenue growth has slightly outpaced the industry average of 5.8%. Since the same quarter one year prior, revenues slightly increased by 2.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • BRINKER INTL INC has improved earnings per share by 15.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, BRINKER INTL INC increased its bottom line by earning $2.21 versus $1.89 in the prior year. This year, the market expects an improvement in earnings ($2.73 versus $2.21).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Hotels, Restaurants & Leisure industry average, but is less than that of the S&P 500. The net income increased by 8.3% when compared to the same quarter one year prior, going from $51.95 million to $56.26 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, BRINKER INTL INC's return on equity significantly exceeds that of both the industry average and the S&P 500.

TheStreet Ratings team rates FINISH LINE INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate FINISH LINE INC (FINL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:
  • The revenue growth came in higher than the industry average of 1.4%. Since the same quarter one year prior, revenues rose by 15.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • FINL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.31, which illustrates the ability to avoid short-term cash problems.
  • Powered by its strong earnings growth of 150.00% and other important driving factors, this stock has surged by 38.93% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, FINL should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • FINISH LINE INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, FINISH LINE INC increased its bottom line by earning $1.56 versus $1.42 in the prior year. This year, the market expects an improvement in earnings ($1.88 versus $1.56).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 145.0% when compared to the same quarter one year prior, rising from $5.08 million to $12.44 million.

This article was written by a staff member of TheStreet.

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