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.
, an information technology company, has been upgraded to buy. The company enjoys a largely solid financial position with reasonable debt levels, impressive growth in EPS and net income, and an increase in stock price during the past year. These strengths are expected to outweigh the fact that company is trading at a premium valuation.
In July, Wipro posted a 16% increase in first-quarter net profit, while revenue climbed 34%. EPS improved by 33.3%. The company has demonstrated a pattern of positive earnings-per-share growth over the past two years, and this trend is expected to continue. Wipro had been rated hold since July.
, a semiconductor-component maker, has been downgraded to hold. While the company maintains a largely solid financial position with reasonable debt levels, reasonable valuation levels and good cash flow from operations, the stock performance has been generally disappointing, net income growth has been unimpressive and EPS growth has been feeble. In August, the company posted a 19% drop in second-quarter income, sliding to $14.8 million from $18.2 million, and guided lower than Wall Street's third-quarter expectations. Entegris had been rated buy since February.
, a bank holding company for First Bank, has been upgraded to buy. The company has enjoyed good cash flow from operations, notable return on equity, an increase in net income, and growth both in EPS and revenue. These factors should outweigh the stock's lackluster performance. In July, First Bancorp posted a 13% increase in second-quarter net income to $5.42 million, while revenue rose by 18% and EPS climbed 12.1%. The company has demonstrated a pattern of positive EPS growth over the past year, and this trend is expected to continue. Return on equity has improved slightly. First Bancorp had been rated hold since June.
has been upgraded to hold. While the company could probably benefit from a solid capital spending environment and from its restructuring activities, poor second-quarter financial performance and a continuing inventory correction in the market are areas of concern. PMC-Sierra posted a second-quarter loss of $22.3 million, compared with a loss of $31.8 million a year earlier. Revenue declined 11.9% to $104.7 million. The company has been executing restructuring activities aimed at streamlining production and reducing operating costs. PMC-Sierra had been rate sell since July 2006.
, a shoe designer and wholesaler, has been downgraded to hold. The company maintains a largely solid financial position with reasonable debt and valuation levels and expanding profit margins. However, net income growth has been unimpressive, operating cash flow has been weak, and the stock performance has been generally disappointing. Steve Madden posted a 17% drop in second-quarter net income to $10.5 million. Net operating cash flow has significantly decreased by 89.6% to $1.81 million Steve Madden had been rate buy since October 2005.
Additional ratings changes are listed below.