Note: Our quantitative model makes stock recommendations based on GAAP figures that may differ materially from data as reported by the companies themselves. As a result, rating changes are occasionally driven by so-called nonrecurring items. As always, we urge readers to use TSC Ratings' reports in conjunction with additional information to construct their opinions on the value that should be placed on any given stock.
The following ratings changes were generated on Tuesday, March 31.
, which provides healthcare information technology solutions, health care devices and related services, from hold to buy. This rating is driven by the company's revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
Revenue rose by 18.1% since the year-ago quarter. The company has a debt-to-equity ratio of 0.1, though it is still higher than the industry average. Its quick ratio is 2.3. EPS rose in the most recent quarter compared with the same quarter a year ago, and we anticipate the company's two-year trend of EPS growth to continue. Net income increased 73.1% compared with the year-ago quarter, from $41.3 million to $71.5 million.
Shares have risen over the past year, outperforming the
. Even the best stocks can fall in an overall down market, but in any other environment, this stock still has good upside potential.
, which designs, manufactures, and distributes valves and related fluid-control products, from hold to sell. This rating is driven by the company's deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.
Net income fell to -$110.1 million from $10.1 million in the same quarter last year. Return on equity also decreased. Circor's gross profit margin is 32.9%, though it has increased from the year-ago quarter. Its net profit margin of -54.5% is below the industry average. Net operating cash flow fell 21.9% to $28.7 million compared with the year-ago quarter.
Shares have tumbled 51.2% over the past year, underperforming the S&P 500. EPS are also down compared with the year-ago quarter. The fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
We've downgraded real estate development company
( MIM) from hold to sell, driven by its feeble growth in its earnings per share, deteriorating net income, poor profit margins, weak operating cash flow and disappointing return on equity.
EPS declined in the most recent quarter compared with the year-earlier quarter. Net income fell from $11.5 million to -$54.6 million. MI Development has a gross profit margin of 21.4%, which has decreased from the same quarter last year. Its net profit margin of -34.9% is below the industry average. Net operating cash flow fell to -$3.9 million compared with the year-ago quarter.
Shares have tumbled 76.5% over the past year, underperforming the S&P 500. Naturally, the overall market trend is bound to be a significant factor, and in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now
, which distributes liquefied petroleum gas to residential, commercial and industrial customers, from hold to buy. This rating is driven by the company's net income, reasonable valuation levels, good cash flow from operations, impressive record of earnings per share growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins.
Net income rose 159.1%, from $15.4 million in the year-ago quarter to $40 million. Net operating cash flow increased 22.5% to $94.5 million. Ultrapar has a debt-to-equity ratio of 0.7, though it is higher than the industry average. Its 1.7 quick ratio demonstrates strong liquidity. EPS improved in the most recent quarter compared with the year-ago quarter, and we feel the company is poised for EPS growth in the coming year.
We've upgraded insurance company
Universal Insurance Holdings
from hold to buy, driven by its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
Revenue increased by 3.2% since the same quarter a year ago, but EPS declined. The company's debt-to-equity ratio of 0.3 is below the industry average. The 49.9% gross profit margin has decreased from the same period last year. The 15.6% net profit margin outperformed the industry average.
Shares have not changed much compared with where they were trading a year ago. It goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
Other ratings changes include
( ELMG), downgraded from buy to hold, and
Old National Bancorp
, downgraded from buy to hold.
All ratings changes from March 31 are listed below.
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. However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company. For those reasons, we believe a rating alone cannot tell the whole story, and that it should be part of an investor's overall research.