The following ratings changes were generated on Thursday, Jan. 22.

We've upgraded

Automatic Data Processing

(ADP) - Get Report

, which provides technology-based outsourcing solutions to employers, vehicle retailers and manufacturers, from hold to buy, driven by its revenue growth, impressive record of earnings per share growth, notable return on equity, reasonable valuation levels and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses that are likely to detract from the generally positive outlook.

Revenue increased by 9.5% since the year-ago quarter, and earnings per share are up 20%. The company has demonstrated a pattern of positive EPS growth over the past two years, and we feel that this trend should continue. Return on equity has improved slightly when compared with the same quarter one year prior, which can be construed as a modest strength in the organization. Net operating cash flow has increased to $398.20 million, or 44% when compared with the same quarter last year.

We've downgraded

Bank of Hawaii

(BOH) - Get Report

from buy to hold. Strengths include its expanding profit margins, growth in earnings per share and notable return on equity. However, we also find weaknesses including weak operating cash flow and a decline in the stock price during the past year.

Bank of Hawaii's gross profit margin of 74% is very high, having increased from the same quarter last year, and its net profit margin of 25% significantly outperformed against the industry average. EPS improved slightly in the most recent quarter. The company has demonstrated a pattern of positive earnings per share growth over the past two years, which we feel should continue.

Revenue fell by 11.7% since the year-ago quarter, and net operating cash flow decreased by 36.8%. Shares are down 18.2% on the year. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

We've downgraded

McMoRan Exploration


, which engages in theexploration, development, production and marketing of crude oil and natural gas, from hold to sell, driven by its deteriorating net income, generally weak debt management, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Net income fell from $12.3 million in the year-ago quarter to -$306.5 million in the most recent quarter, significantly underperforming the

S&P 500

and the oil, gas and consumable fuels industry. Net operating cash flow decreased to $12.8 million. ROE also greatly decreased. McMoran's 1.2 debt-to-equity ratio is relatively high when compared with the industry average, suggesting a need for better debt level management, and the company maintains a poor quick ratio of 0.7, which illustrates the inability to avoid short-term cash problems.

Shares are down 36.8% on the year, and EPS are down 3,207.1%. 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

We've upgraded

L.S. Starrett

(SCX) - Get Report

, which engages in the manufacture and sale of industrial, professional and consumer products worldwide, from hold to buy, driven by its revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, increase in net income and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Revenue rose by 14% since the year-ago quarter, and EPS rose by 14.3%. . The company has demonstrated a pattern of positive earnings per share growth over the past two years. Net income is up 12.6%. Starrett's 0.07 debt-to-equity ratio is very low and is currently below that of the industry average, implying very successful management of debt levels, and its quick ratio of 2.00 demonstrates the ability of the company to cover short-term liquidity needs. The company's gross profit margin of 35.1% is strong, though it has decreased from the same period last year. Starrett's net profit margin of 3.9% trails the industry average.

All ratings changes generated on Jan. 22 are listed below.

Each business day, 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.