Each weekday, TheStreet.com Ratings updates its ratings on the stocks it covers. The proprietary ratings model projects a stock's total return potential over a 12-month period, including both price appreciation and dividends. Buy, hold or sell ratings designate how the Ratings group expects these stocks to perform against a general benchmark of the equities market and interest rates.
While the ratings model is quantitative, it uses both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and company earnings forecasts. Objective elements include volatility of past operating revenue, financial strength and company cash flows.
Vina Concha a Toro
produces and exports wine in Chile and internationally. It has been downgraded to hold from buy. The company demonstrated revenue growth of 45.9% in the second quarter of 2007 compared with the same period last year, and net income increased by 96.7% over the same period. It also shows expanding profit margins and a debt-to-equity ration below that of the industry average.
As a counter to these strengths, the company has not displayed a clear earnings trend over the past two years. Vina Concha a Toro had been rated a buy since September 2006.
Miner of palladium, platinum and associated metal
Stillwater Mining Company
has been downgraded to a sell from a hold. The historical performance of the company's stock has been generally disappointing, and its profit margins have been poor. Stillwater's net loss widened to $2.52 million in the second quarter of 2007 from $2.34 million a year earlier. T
he company has reported somewhat volatile earnings recently, and TheStreet.com Ratings believe it is likely to report a decline in the coming year. Stillwater Mining Company had been rated a hold since November 2006.
provides wireless communications solutions to the health care, government, enterprise and emergency response sectors. It has been downgraded to a hold from a buy.
Its EPS improved by 17.5% in the second quarter of 2007 over the year-earlier period, continuing a two-year pattern of growth. The company has no debt to speak of and maintains a quick ratio of 1.17, which illustrates the ability to avoid short-term cash problems. However, the company's stock price has declined by 16.69% in the last 12 months, and the fact that the stock is now selling for less than others in its industry in relation to its current earnings is reason enough to justify a buy rating at this time. USA Mobility had been rated a buy since June 2007.
Sporting goods retailer
Big 5 Sporting Goods
has been downgraded to a hold from a buy. The company's strengths include its expanding profit margins. Its net income decreased by 20.0% in the second quarter of 2007 compared with the same period last year, and its stock price has essentially been flat over the past 12 months.
Big 5 has reported volatile earnings recently, and TheStreet.com Ratings believe it is likely to report an EPS decline in the coming year. The stock had been rated a buy since November 2006.
manufactures and supplies structural and related building products for residential new construction. It has been downgraded to a sell from a hold. Its net income decreased by 70.4% in the second quarter of 2007 compared with the same period last year, falling to $8.40 million from $28.38 million.
The company's return on equity declined to 11.01% in the second quarter of 2007, down from 41.28% in the prior year. This is a sign of major weakness within the corporation. Its debt-to-equity ratio of 1.18 is relatively high when compared with the industry average, suggesting a need for better debt management, and its stock price is down 13.73% over the past 12 months. Builders FirstSource had been rated a hold since March 2007.
Additional ratings changes are listed below.