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.
TheStreet.com Ratings has initiated coverage of the credit card company
with a sell rating. The company's return on equity has fallen to just 5.3% in the first quarter of 2007, which is well below the industry average of 20.3%. In spite of this, the stock price is up 245% over the past 12 months. As a result, MasterCard now trades at a significant premium to its peers.
has been downgraded to hold from buy. The company provides products that help prevent and control infections. Net income was off nearly 51% in the third quarter of fiscal 2007 compared with the year-earlier period. Return on equity was also down, and at 4.7% it significantly trails the industry average of 23.9%. Cantel had been rated a buy since May 2007.
Managed health care provider
has also been downgraded to hold from buy. The company's earnings per share plunged 44% in the first quarter of fiscal 2007 compared with the same quarter a year earlier. Net operating cash flow also fell 81% during that period. Amerigroup had been rated a buy since April 2006.
Teen fashion retailer
has been downgraded to sell from hold. The company's losses widened to 11 cents per share in the first quarter of fiscal 2007 compared with 5 cents per share a year earlier. Shares of Delia's are down 6.3% in the past year. Looking ahead, TheStreet.com Ratings does not see anything in the company's numbers that may help to reverse the decline. DLIA had been rated a hold since January 2007.
TheStreet.com Ratings has initiated coverage of
with a sell rating. The company provides broadband voice-over-Internet protocol services to residential and small business customers in the U.S., U.K. and Canada. TheStreet.com Ratings feels Vonage's most important weakness is its poor debt management. The current debt-to-equity ratio of 2.34 is higher than the industry average. The company's stock performance has also disappointing, and return on equity is well below that of its peers.
Additional rating changes are highlighted below.