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.
offers business and mobile software and services worldwide. It has been upgraded to a buy from a hold. The company's revenue increased by 41.4% in the third quarter compared with the same period last year, outpacing the industry average of 18.4%. Revenue growth helped boost earnings per share by 112.5% over the same timeframe. Adobe has no debt to speak of, a relatively favorable sign, and maintains a quick ratio of 2.82, which demonstrates the ability to cover short-term cash needs. The company's stock price has increased by 14.16% over the past year, reflecting both its robust earnings growth and the market's overall trend. Adobe had been rated a hold since June 2007.
has been downgraded to a hold from a buy. The company's strengths include its attractive valuation levels and its EPS, which improved by 15.2% in the second quarter compared with the same period last year. The company has reported somewhat volatile earnings recently, but TheStreet.com Ratings believe it is poised for EPS growth in the coming year. As a counter to these strengths, AutoNation's return on equity decreased to 8.61% in the second quarter compared with the same period last year, which implies minor weakness in the organization. Return on equity is also significantly below that of both the industry average and the
. AutoNation had been rated a buy since September 2005.
has been upgraded to a buy from a hold. The company's EPS rose 58.82% in the second quarter compared with the same period last year, continuing a two-year trend of earnings growth. It has no debt to speak of, a relatively favorable sign, and sports a quick ratio of 2.27, which demonstrates the ability to cover short-term liquidity needs. eBay's stock price has increased by 44.80% in the last 12 months, outperforming the rise in the
over the same time. Although almost any stock can fall in a broad market decline, eBay should continue to move higher. The company had been rated a hold since July 2006.
Fifth Third Bancorp
, through its subsidiaries, operates as a diversified financial services company. It has been downgraded to a hold from a buy.
The company strengths include its reasonable valuation levels and expanding profit margins. However, its stock price has declined 11.12% in the past 12 months, and looking ahead, TheStreet.com Ratings do not see anything in the company's numbers that would change this trend. (Naturally, a bull or bear market could sway the movement of this stock.) In addition, net operating cash flow decreased 53.15% to $275 million in the most recent period. Fifth Third Bancorp had been rated a buy since June 2007.
has been downgraded to a hold from a buy. The company's revenue grew by 17.4% in the second quarter compared with the same period last year, exceeding the industry average of 4.4%. Return on equity improved to 39.43% in the same period.
Harley-Davidson also has a largely solid financial position with reasonable debt levels by most measures. The company's EPS increased by 25.3% in the second quarter compared with the same period last year, continuing a pattern of positive earnings growth over the past two years.
As a counter to these strengths, the company's stock price has declined by 26.70% in the last 12 months, as investors have so far failed to pay much attention to the earnings improvements. And although the share price is down sharply from last year, Harley-Davidson is still more expensive than most of the other companies in its industry. It had been rated a buy since September 2005.
Additional ratings changes are listed below.