Each weekday, TheStreet.com Ratings updates its ratings on the stocks we cover. Our model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our buy, hold or sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates.
While our 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 forecasted company earnings. Objective elements include volatility of past operating revenue, financial strength and company cash flows.
Some recent rating changes are highlighted below.
Building materials supplier
has been upgraded to a hold from a sell. TheStreet.com Ratings feels this company's major strength is its reasonable valuation level when compared to its peers. The price-to-earnings ratio for Builders FirstSource's stock is around half the industry average. The company had been rated a sell since July 2006.
Performance Food Group
has been upgraded to a buy from a hold. The company has demonstrated a pattern of positive earnings per share growth over the past two years. Net operating cash flow reached $20.8 million in the fourth quarter of fiscal 2006, a 51.2% jump from the same quarter a year ago. Performance Food Group had been rated a hold since July 2006.
Workforce management company
( KRON) has been upgraded to a buy from a hold. Revenue was up 16.2% in the first quarter of fiscal 2007 compared with the same quarter a year earlier. The company's gross profit margin has also increased over the past 12 months, climbing to 63%. TheStreet.com Ratings feels there is still more upside potential for this stock. Kronos had been rated a hold since July 2006.
has been downgraded to a hold from a buy. Earnings per share declined 65.3% in the fourth quarter of fiscal 2006 compared with the same quarter a year earlier. Gross profit margins have also fallen over the past 12 months. Magna International had been rated a buy since March 2005.
has been downgraded to a hold from a buy. The company is one of North America's largest packaged food providers, supplying grocery stores, retailers and restaurants. ConAgra's return on equity declined slightly in the third quarter of fiscal 2006, falling to 11.7% compared with 12.6% the same quarter a year earlier. The company's stock price rose 22.8% last year, bringing its price-to-earnings ratio close to the industry average. TheStreet.com Ratings feels there may not be much upside potential left. ConAgra had been rated a buy since October 2006.
Additional ratings changes are listed in the table below.