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.
Knight Capital Group
offers financial services through its two segments: asset management and global markets. It has been downgraded to hold from buy.
The company's debt-to-equity ratio of 0.43 is below the industry average, implying that there has been successful management of debt, and it is stock is reasonably valued. However, revenue fell by 2.2% in the second quarter compared with the same period last year, and net income declined 19.6% to $24.38 million in the same time frame.
Knight Capital's stock price has drooped 34.40% in the past 12 months, and despite the large decline, the stock is still more expensive (compared with current earnings) than most other companies in its industries. The company had been rated a buy since October 2005.
Manufacturer and marketer of various food and protective packaging products
has been downgraded to hold from buy.
The company's EPS improved 29% in the second quarter compared with the same period last year, continuing a two-year pattern of growth. Net income increased by 27.9% to $73.90 million in the same time frame, outperforming the
and the containers and packaging industry average. The company's debt-to-equity ratio of 1.00 is generally considered high but is nevertheless lower than the industry average.
However, its gross profit margin of 32.10% is currently lower than what is desirable, and it has decreased from the same quarter last year. Still, the company's net profit margin of 6.50% is above the industry average. Sealed Air had been rated a buy since September 2005.
( MDG) engages in the mining and exploration of gold and other precious metals in Chile, Mexico and the U.S. It has been upgraded to buy from hold. The company's revenue increased by 47.1% in the second quarter compared with the same period last year, and this has trickled down to EPS, which rose 26.3% over the same period.
Meridian has demonstrated a pattern of positive EPS over the last two years. Powered by strong earnings growth, the company's stock price has improved by 38.71% in the last 12 months, outperforming the S&P 500. This sharp rise has helped drive it to a level which is relatively expensive compared with the rest of its industry. However, TheStreet.com Ratings believe the company's strengths justify the higher price levels. Meridian Gold had been rated a hold since February 2007.
has been downgraded to hold from buy. Althought the company's debt-to-equity ratio has been mixed, its quick ratio of 2.50 is very high and demonstrates very strong liquidity. Korn/Ferry's revenue growth of 21.8% in the first quarter of its fiscal year 2008 was above the industry average of 8.5%. Korn/Ferry's EPS also rose 16.1% in the quarter.
While the company has reported somewhat volatile earnings recently, TheStreet.com Ratings feels it is poised for earnings growth in the coming year. Return on equity of 13% in the quarter was lower than in the same quarter last year, a clear sign of weakness within the company. Korn/Ferry had been rated a buy since September 2005.
TheStreet.com Ratings has initiated coverage on
Atlas Pipeline Holdings
( AHD), which is involved in the transmission, gathering and processing of natural gas in the mid-Continent and Appalachian regions. It has been rated a sell.
The company experienced a net loss of $1.29 million in the second quarter compared with a profit of $4.53 million in the same period last year. Its gross profit margin of 22.80% is rather low, though it has increased since the same time last year. Even though the company has a mixed debt-to-equity ratio, its quick ratio of 0.59 is low and demonstrates weak liquidity.
Additional ratings changes are listed below.