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 forecasted company earnings. Objective elements include volatility of past operating revenue, financial strength and company cash flows.
Some recent rating changes are highlighted below.
Linear and special electric motor manufacturer
has been upgraded to a buy from a hold. The company's revenue growth of 39.3% in the third quarter of fiscal 2006 soared above the industry average of 9.7% during the same period. It enjoyed EPS growth of 26.3% during the third quarter and has a somewhat low debt-to-equity ratio of 0.74. These strengths outweigh the company's net income growth, which has significantly underperformed the industry average. Harbin had been rated a hold since April 2006.
, a provider of interconnect products and systems for radio frequency communications products, has been downgraded to a hold from a buy. The company produced EPS growth of 425% in the third quarter of 2006 compared with the same quarter a year ago and saw its net income increase by 498.3% during the same period. However, it has shown weak cash flow from operations. RF Industries had been rated a buy since April 2006.
, a developer of medical treatments for cancer patients, has been upgraded to a buy from a hold. The company has demonstrated strong revenue growth of 33.5% in the third quarter of 2006 compared to the same period last year, improved return on equity (indicating significant strength within the corporation) and a pattern of positive EPS growth over the past two years. The steep decline of its share price over the past year has made it cheaper in proportion to its earnings over that period. ImClone had been rated a hold since August 2006.
Communications services provider
has been downgraded to a hold from a buy. The company's revenue growth of 10.6% in the third quarter of 2006 trailed behind the industry average of 18.5%. Its stock price disappointed during that period, declining by nearly 3.8%, and the company's positive financial indicators cannot outweigh its generally poor debt management on most measures evaluated by TheStreet.com Ratings. General Communication had been rated a buy since August 2006.
provides professional portrait photography of young children and families. It has been upgraded to a buy from a hold. Driven in part by its strong earnings growth of 61.5% in the third quarter of 2006, CPI's stock price has climbed 186.4% 12 months prior to March 2. The company has also shown weak cash flow from operations. CPI had been rated a hold since June 2006.
Providing business communications services,
has been upgraded to a buy from a hold. It demonstrated revenue growth of 14.9% in the third quarter of 2006, outpacing the industry average of 12.9% over the same period. The company has also displayed very effective management of debt levels, evinced by a very low debt-to-equity ratio of 0.29. Still, TheStreet.com Ratings sees weaknesses that include deteriorating net income, poor profit margins and relatively poor stock price performance over the 12 months prior to March 2 when compared with the
. Bowne had been rated a hold since March 2005.