Each business day, TheStreet.com Ratings updates its ratings on the stocks it covers. Its 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. 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.
designs and manufactures high-precision data acquisition and image processing-based medical and security systems. It has been upgraded to buy from hold. The company's revenue increased by 24.1% in the first quarter of its fiscal year compared with the same period last year, outpacing the industry average of 2.8%. Analogic has no debt to speak of, a relatively favorable sign. The company also maintains a quick ratio of 5.14, which demonstrates the ability to cover short-term cash needs. Its first-quarter earnings swung to 48 cents per share from a loss of 39 cents a share in the same period last year. The company has shown a pattern of positive earnings-per-share growth over the past year, and we expect this trend will continue. Analogic's stock price has gone up by 22.26%, largely on the back of its strong earnings. While it goes without saying that even the best stocks can fall in an overall down market, in any other environment, this stock still has good upside potential. Analogic had been rated hold since October 2007.
develops, manufactures and sells equipment for broadband networks. It has been downgraded to hold from buy. The company's third-quarter revenue rose 11.4% year over year, trailing the industry average of 38.9%. It's debt-to-equity ratio is relatively low at 0.39, but still above the industry average. This suggets that we may need to further evaluate management of debt levels. ARRIS also demonstrates attractive valuation levels, and its earnings rose to 25 cents per share in the third quarter from 24 cents a share in the year-ago period. As a counter to these strengths, TheStreet.com Ratings finds weaknesses that include poor profit margins, weak operating cash flow and a stock price that has fallen 24.63% over the past 12 months. ARRIS had been rated buy since February 2006.
, together with its subsidiaries, purchases and services distressed performing and nonperforming consumer receivables. It has been downgraded to hold from buy. The company's third-quarter revenue rose 43.3% over last year, outpacing the industry average of 3.8%. Its other strengths include attractive valuation levels and expanding profit margins. However, its fourth-quarter earnings fell 88 cents a share compared with 93 cents a share a year ago, and the company has reported somewhat volatile EPS recently. In addition, its stock price has fallen by 23.26% in the last 12 months, and the fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time. Asta had been rated buy since December 2005.
Black & Decker
( BDK) manufactures and markets power tools, hardware and home improvement products. It has been downgraded to hold from buy. Third-quarter revenue increased by 1.5% compared with the same period last year, trailing the industry average of 4.4%. Net income fell 16.4% to $105 million, or $1.59 per share, from $125 million, or $1.74 a share. Its debt-to-equity ratio of 1.59 is quite high overall and when compared with the industry average, suggesting that current management of debt levels should be evaluated. The company also demonstrates weak operating cash flow. Black & Decker had been rated a buy since December 2005.
This article was written by a staff member of TheStreet.com Ratings.