TheStreet.com Ratings: Stock Upgrades, Downgrades - TheStreet

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.

Insurance broker

Brooke

(BXXX)

has been downgraded to a hold from a buy. Although revenues were up in the fourth quarter of fiscal 2006 compared with the same quarter a year ago, the growth has not trickled down to the bottom line. Earnings per share fell over the same time period. In spite of this, the company's stock continues to trade at a higher price-to-earnings ratio than the insurance industry average. TheStreet.com Ratings feels this will limit the future upside potential of this stock. Brooke had been rated a buy since August 2006.

Insurance industry software developer

Ebix

(EBIX) - Get Report

has been downgraded to a hold from a buy. TheStreet.com Ratings feels this company has weak liquidity and may be unable to cover short-term cash needs. Currently, Ebix's quick ratio, a measurement comparing the company's noninventory assets with its liabilities, stands at just 0.7. Ebix had been rated a buy since October 2006.

Tokyo-based electronics manufacturer

Hitachi

( HIT) has been upgraded to a hold from a sell. The company's revenues shot up 17.6% in the third quarter of fiscal 2006 compared with the same quarter a year ago. Hitachi's stock price has risen 8.6% in the past 12 months. HIT had been rated a sell since November 2006.

Shoemaker

Phoenix Footwear

(PXG)

has been downgraded to a sell from a hold. The company's products are sold under various brand names, including SoftWalk, Trotters and Tommy Bahama. Phoenix lost $2.95 per share in the fourth quarter of fiscal 2006 after earning 1 cent per share in the same quarter a year ago. Gross profit margins are also on the decline. Phoenix had been rated a hold since April 2005.

Security provider

Compudyne

( CDCY) has been downgraded to a sell from a hold. The company has reported a trend of declining earnings per share over the past two years. Compudyne's stock price has fallen 20.3% in the past 12 months. CDCY had been rated a hold since December 2006.

CVB Financial

(CVBF) - Get Report

has been downgraded to a hold from a buy. The company owns and operates Citizens Business Banks, with 40 branches in California. Earnings per share fell 6.2% in the fourth quarter of fiscal 2006 compared with the same quarter a year ago. CVB's stock price has tumbled 21.9% over the past 12 months. TheStreet.com Ratings does not see anything in the company's numbers to reverse this trend in the future. CVB had been rated a buy since July 2006.

Temporary staffing service

Ablest

(AIH)

has been upgraded to a buy from a hold. The company earned 10 cents per share in the fourth quarter of fiscal 2006, a significant improvement over the same quarter a year ago, when the company lost 23 cents per share. Net income is up 146.3% over the same time period. Ablest had been rated a hold since August 2006.

Consumer electronics retailer

Circuit City

(CC) - Get Report

has been downgraded to a hold from a buy. Circuit City lost 9 cents per share in the fourth quarter of fiscal 2006 after gaining 84 cents per share during the same quarter a year ago. The company's return on equity has also fallen over that same time period, which TheStreet.com Ratings feels is a clear sign of weakness within the company. Circuit City had been rated a buy since November 2005.