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.
Health care equipment manufacturer
has been downgraded to a hold from a buy. The company has a negative return on equity of 1.1% that is well below the industry average. Net operating cash flow decreased 19.9% to $11.22 million in the first quarter of fiscal 2007 when compared to the same quarter a year earlier. Conmed had been rated a buy since May 2007.
Real estate developer
Forest City Enterprises
has been downgraded to a sell from a hold. The company lost 17 cents per share in the first quarter of fiscal 2007 after gaining 8 cents per share a year earlier. Forest City's return on equity is just 0.5%, far lower than the industry average of 11.1%. In addition to these weaknesses, the company also has generally weak debt management, premium valuation and weak operating cash flow. Forest City had been rated a hold since April 2007.
Aerospace and defense manufacturer
( HSR) has been downgraded to a hold from a buy. The company makes pyrotechnic power products that are used in satellites, fighter aircraft and missiles. The company has negative net operating cash flow. The performance of Hi-Shear stock has been disappointing, shares have fallen 26.8% in the past year. Even after this decline, HSR still trades at a slightly higher valuation than many of its peers. The company had been rated a buy since May 2006.
Wholesale power generator
has been downgraded to a hold from a buy. Net operating cash flow has significantly decreased 71% to $106 million in the first quarter of fiscal 2007 over the year-earlier period. TheStreet.com Ratings feels that the gross profit margin is currently lower than what is desirable, coming in at 33.6%. NRG had been rated a buy since March 2007.
TheStreet.com Ratings has initiated coverage of
Mueller Water Products
with a sell rating. TheStreet.com Ratings feels the gross profit margin for this company is currently lower than what is desirable, coming in at 31.1%. The net profit margin of 3.9% trails the industry average. The stock price has remained relatively flat over the past year, and MWA remains somewhat expensive in terms of its price-to-earnings ratio in relation to the industry as a whole.
Some recent rating changes are highlighted below.