TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.
The following ratings changes were generated on Wednesday, April 1.
We've upgraded convenience store operator
Casey's General Stores
from hold to buy, driven by its growth in earnings per share, increase in net income, reasonable valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
EPS have improved by 7.7% in the most recent quarter compared with the year-ago quarter, and we feel that the company's two-year pattern of positive EPS growth should continue. Net income increased by 7.6%, from $13 million in the year-ago quarter to $14 million. Net operating cash flow increased by 72.5% to $32.5 million.
Shares have risen over the past year at a faster pace than the
. 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.
We've upgraded branded food company
from hold to buy, driven by its revenue growth, impressive record of earnings per share growth, compelling growth in net income, solid stock price performance 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.
Revenue rose by 12.5% since the same quarter last year. EPS also improved, and we feel that the company's two-year trend of EPS growth should continue. Net income increased by 129.8% compared with the year-ago quarter, rising from $2.7 million to $6.1 million. Net operating cash flow increased 6.3% to $67.7 million.
Shares are up 54% over the past year, outperforming the S&P 500 during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
, which engages in the design, development and marketing of semiconductors that are used as components of flat panel displays, from sell to hold. Strengths include the company's largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and notable return on equity. However, we also find weaknesses including feeble growth in the company's earnings per share, poor profit margins and weak operating cash flow.
The company has a quick ratio of 3.5, which implies strong liquidity. Revenue fell 53.5% since the year-ago quarter, and EPS decreased. We anticipate that the company's yearlong trend fo declining EPS should continue in the coming year. The 23.6% gross profit margin has decreased from the year-ago quarter.
, which provides various financial services to high-net-worth individuals and families, corporate executives and small and mid-sized businesses worldwide, from hold to sell. This rating is driven by the company's feeble growth in its earnings per share, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.
EPS declined in the most recent quarter compared with the same quarter a year ago. Return on equity also decreased, which could imply weakness in the corporation. The gross profit margin of 0.7% has decreased from the same period last year. Net income decreased from $26.5 million in the year-ago quarter to -$3.8 million.
Shares have tumbled 77% 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 engages in the design, manufacture and marketing of office furniture, 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 decreased from $30.6 million in the year-ago quarter to -$65.7 million in the most recent quarter. ROE also decreased, which could signal weakness in the corporation. Steelcase's gross profit margin of 30.5% has decreased from the year-ago quarter, and its net profit margin of -10% is below the industry average. Net operating cash flow fell to -$8 million in the most recent quarter.
Shares have tumbled by 54.7% over the past year, underperforming the S&P 500, and EPS were also down compared with the year-ago quarter. 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.
Other ratings changes include
, downgraded from hold to sell, and
, downgraded from buy to hold.
All ratings changes from April 1 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.
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.