Macy's, AngloGold Ashanti: Ratings Changes - TheStreet

BOSTON (TheStreet) -- As fourth-quarter earnings reports stream in, TheStreet's quantitative equity model is warming to stocks with improving fundamentals. Here are three critical upgrades.

3.

The model upgraded

IMS Health

(RX)

, a consultant and data-provider to health-care companies, to "buy."

The numbers

: Fourth-quarter profit decreased 27% to $72 million, or 39 cents a share, as revenue ascended 3.1% to $599 million. The operating margin declined from 23% to 22%. IMS Health holds $385 million of cash and $1.2 billion of debt.

The stock

: IMS Health advanced 63% in the past year, outpacing major U.S. indices. The stock trades at a price-to-projected-earnings ratio of 13, a discount to health-care-technology peers. The shares are also cheap when considering sales and cash flow.

2.

The model upgraded department-store-owner

Macy's

(M) - Get Report

to "hold."

The numbers

: Macy's swung to a fourth-quarter profit of $466 million, or $1.10 a share, from an impairment-related loss of $4.8 billion, or $11.33, a year earlier. Revenue declined 1% to $7.8 billion. The operating margin extended from 10% to 13%. Macy's holds $1.7 billion of cash and $8.7 billion of debt.

The stock

: Macy's soared 135% over the past year, beating U.S. benchmarks. The stock trades at a price-to-projected-earnings ratio of 10, a discount to retail peers. Its PEG ratio, a measure of value relative to growth, of 0.3 represents an 85% discount to the industry average.

1.

The model upgraded gold miner

AngloGold Ashanti

(AU) - Get Report

to "hold."

The numbers

: AngloGold Ashanti swung to a fourth-quarter profit of $423 million, or $1.15 a share, from a loss of $1 billion, or $2.85, a year earlier. Revenue increased 44% to $1.3 billion. The operating margin stretched from 11% to 25%. AngloGold Ashanti holds $1.2 billion of cash and $1.9 billion of debt.

The stock

: AngloGold Ashanti appreciated 19% during the past 12 months, lagging behind major U.S. indices. The stock trades at a price-to-projected-earnings ratio of 18, on par with gold peers. The shares have whipsawed over the past year, hurt by losses in two of the past five quarters.

-- Reported by Jake Lynch in Boston.