Analysts' Upgrades, Downgrades: Heinz

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We upgraded HJ Heinz(HNZ Quote) to "buy." The company makes and markets processed food products, including, of course, ketchup worldwide.

The numbers: Fiscal second-quarter revenue declined 5.6% to $2.5 billion as net income and earnings per share fell 9.8% to $175 million and 42 cents, respectively. Profitability metrics declined a bit, with the operating margin falling 83 basis points to 13% and the net margin dropping 31 basis points to 6.9%. Heinz has a weak financial position, as reflected by more than $5.1 billion of debt and just $373 million in cash. But the company has proven that it has a resilient business model.

The stock: Heinz has dropped 4% in 2009, outperforming the Dow Jones Industrial Average and underperforming the S&P 500 Index. The stock trades at a low price-to-earnings ratio of 12, offers a high 4.6% dividend yield and has a record of payout increases. ...