Each business day, 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.
Allied Waste Industries
provides waste collection, transfer, recycling and disposal services in the U.S. and Puerto Rico. It has been downgraded to hold from buy.
The company's revenue grew by 2.0% in the third quarter compared with the same period last year, outpacing the industry average of 0.6%. Allied Waste also displays expanding profit margins and good cash flow from operations. However, its third-quarter earnings fell by 11.77% to 15 cents per share from 17 cents a share in the same period last year, and the company has shown generally poor debt management.
Its stock price has fallen 14.96% in the last 12 months, and despite the decline, is still selling for more than most others in its industry. Allied Waste had been rated a buy since August 2007.
distributes pipes, valves, flanges, production equipment and other general oilfield supplies to oil and gas producers. It has been downgraded to a hold from a buy.
The company's debt-to-equity ratio of 0.31 is below that of the industry average, implying that there has been successful management of debt levels. CE Franklin also maintains an adequate quick ratio of 1.06, which illustrates the ability to avoid short-term cash problems. It is also attractively valued and has good cash flow from operations.
However, the company's third-quarter earnings fell 12% to 22 cents a share from 25 cents per share in the same period a year earlier, its return on equity was disappointing, and its profit margins poor compared with the year-earlier period. CE Franklin had been rated a buy since October 2007.
manufactures and sells semiconductor-based products through two segments: fiber optics and photovoltaics. It has been downgraded to sell from hold.
The company posted a loss of $16.19 million in the fourth quarter compared with a profit of $75 million in the same period last year, and return on equity greatly decreased over the same time frame. Emcore's debt-to-equity ratio of 0.85 is somewhat low overall, but is high when compared with the industry average, implying that the management of debt levels should be evaluated further.
However, its quick ratio of 1.58 is high and demonstrates strong liquidity. Emcore had been rated a hold since December 2005.
EXFO Electro Optical Engineering
manufactures and sells telecommunications test, measurement and monitoring equipment through two segments: telecom and life sciences and industrial. It has been downgraded to hold from buy.
The company has demonstrated a pattern of positive earnings growth in the past two years, and fourth-quarter EPS rose to 61 cents per share from 4 cents a share in the same period last year. Its revenue increased by 20.7% over the same time frame. However, the company's weaknesses include weak operating cash flow and a stock price which has fallen by 9.25% in the last 12 months.
While the decreased share price could be one of the factors that may make the stock attractive down the road, right now TheStreet.com Ratings believes it is too soon to buy. EXFO had been rated a buy since January 2007.
TheStreet.com Ratings initiated coverage of
, which provides natural gas contract compression services. It has been rated a sell.
The company's third-quarter earnings fell to 45 cents a share compared with $2.68 cents per share a year earlier, and its debt-to-equity ratio of 1.49 is relatively high when compared with the industry average. This suggests a need for better debt level management. Exterran's revenue plummeted 65.7% in the third quarter compared with the same period last year. Its gross profit margin was 44.6% for the third quarter, which we consider strong.
However, it is down compared with the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 21.6% trails the industry average.
Additional ratings changes are listed below.