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.

The following ratings changes were generated on July 31

Lear

(LEA) - Get Report

, which engages in the design, manufacture and sale of automotive seat systems, electrical distribution systems and electronic products, was downgraded to sell. The rating change was driven by several weaknesses, which we believe should have a greater impact than any strengths and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally weak debt management, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

We analyzed the company's financial position and calculated the debt-to-equity ratio to be 1.84, which is quite high overall and when compared with the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with the unfavorable debt-to-equity ratio, Lear maintains a poor quick ratio of 0.77, which illustrates the inability to avoid short-term cash problems. In its most-recent quarterly results, net income has fallen significantly to $18.3 million from $123.6 million, a decrease of nearly 85.2% when compared with the same quarter one year ago--on the basis of change in net income, it has significantly underperformed when compared with that of the S&P 500 and the Auto Components industry.

The gross profit margin for the firm is currently extremely low, coming in at 8.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.50% trails that of the industry average. Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 55.76%, worse than the

S&P 500's

performance.

Consistent with the plunge in the stock price, the company's earnings per share are down 85.44% compared with the year-earlier quarter. Lear has experienced a steep decline in earnings per share in the most-recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We believe it is likely to report a decline in earnings in the coming year. During the past fiscal year, the firm turned its bottom line around by earning $3.08 a share versus a loss of $9.88 a share in the prior year. For the upcoming fiscal year, the market is expecting earnings to decline to $3.04 a share. Due to the concerns mentioned, as well as some other factors, we believe the stock is still not a good buy right now. Lear had been rated a hold since February 14, 2008.

Broadcom

(BRCM)

, which designs, develops and supplies semiconductors for wired and wireless communications markets, was downgraded to hold. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and compelling growth in net income. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

First off, Broadcom has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.92, which clearly demonstrates the ability to cover short-term cash needs. The company has performed quite well financially with its revenue growth coming in higher than the industry average of 9.5%. Since the same quarter one year prior, revenue rose by 33.7%. Growth in the company's revenue appears to have helped boost the earnings per share. The semiconductor firm reported significant earnings per share improvement in the most-recent quarter compared to the same quarter a year ago. However, predicting earnings have been troublesome for analysts' since the company has been reporting somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year.

During the past fiscal year, Broadcom earned 37 cents a share vs. 65 cents in the prior year. This year, the market expects earnings to improve drastically to $1.72 a share. The return on equity has improved slightly when compared with the same quarter one year prior. This can be construed as a modest strength in the organization. When compared with other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, Broadcom's return on equity is below that of both the industry average and the

S&P 500

. The company's stock share price has done very poorly compared with where it was a year ago. Despite any rallies, the net result is that it is down by 29.41%, which is also worse that the performance of the

S&P 500

Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, the stock is still more expensive than most of the other companies in its industry. Broadcom had been rated a buy since September 23, 2008.

Plantronics AG

(PLT) - Get Report

, which engages in the design, manufacture, and marketing of lightweight communications headsets, telephone headset systems, and accessories for the business and consumer markets, was upgraded to buy.

Plantronics' strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and attractive valuation levels. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

The company has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.55, which clearly demonstrates the ability to cover short-term cash needs. A look at the firm's recent financials shows revenue growth coming in higher than the industry average of 10%. Since the same quarter one year prior, revenues slightly increased by 6.1%. Growth in the company's revenue appears to have helped boost the earnings per share. Plantronics has improved earnings per share by 35.5% in the most-recent quarter compared with the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We believe that this trend should continue.

During the past fiscal year, the bottom line increased to $1.40 a share vs. $1.04 in the prior year. Wall Street expects earnings to continue to increase, estimating it to rise to$1.72 a share--an increase of about 23%. The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 36.9% when compared with the same quarter one year prior, rising to $20.5 million from $14.98 million. Plantronics had been rated a hold since November 21, 2007.

Starent Networks

(STAR) - Get Report

, which provides infrastructure hardware and software products and services that enable mobile operators to deliver multimedia services to their subscribers worldwide, was initiated with a sell.

We gave this initial rating as a result of several weaknesses we noticed, which we believe could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The area that we feel has been the company's primary weakness has been its poor profit margins. The gross profit margin for Starent is currently very high, coming in at 78.30%. Regardless of the firm's high profit margin, it has managed to decrease from the same period last year.

Despite the mixed results of the gross profit margin, its net profit margin of 22.50% compares favorably with the industry average. In comparison with the other companies in the Communications Equipment industry and the overall market, Starent's return on equity is significantly below that of the industry average and is below that of the S&P 500. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. The company reported significant earnings per share improvement in the most-recent quarter compared to the same quarter a year ago--earning 74 cents a share compared to 13 cents a year ago. Net income rose to $13.78 million from $3.38 million it earned in the same quarter last year--the growth in net income has significantly exceeded that of the

S&P 500

and the Communications Equipment industry. Starent's share price has done very poorly compared with where it was a year ago: Despite any rallies, the net result is that it is down by 27.02%, which is also worse that the performance of the S&P 500 Index.

Silicon Motion

(SIMO) - Get Report

, which is a fables semiconductor company, together with its subsidiaries, designs, develops, markets and supplies semiconductor solutions for the multimedia consumer electronics market, was downgraded to hold.

Silicon Motion's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels, by most measures, and expanding profit margins. But the downgrade was primarily driven by the unimpressive growth in net income, disappointing return on equity and a generally disappointing performance in the stock itself. The revenue growth greatly exceeded the industry average of 9.5%. Revenue rose by 47.1%. Since the same quarter one year prior, the growth in revenue does not appear to have trickled down to the company's bottom line.

The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared with the Semiconductors & Semiconductor Equipment industry average but is greater than that of the S&P 500. Net income fell to $8.26 million from $9.87 million, a decreased of 16.3% when compared with the same quarter one year ago. As a result, earnings per share declined by 19.4% for the same quarter when compared with the same period last year. Even though the company has reported somewhat volatile earnings recently, we feel it is poised for EPS growth in the coming year.

During the past fiscal year, the firm increased its bottom line by earning $1.21 a share versus 93 cents a share in the prior year. For the next fiscal year, analysts' estimate earnings to increase to $2.02 a share. The firm's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.60, which clearly demonstrates the ability to cover short-term cash needs. Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared with other companies in the Semiconductors & Semiconductor Equipment industry and the overall market on the basis of return on equity, Silicon Motion has underperformed in comparison with the industry average but has exceeded that of the S&P 500. Silicon Motion had been rated a buy since July 1, 2008

Additional ratings changes from July 31 are listed below.

This article was written by a staff member of TheStreet.com Ratings.