The following ratings changes were generated on Thursday, Jan. 8.
China Fire & Security Group
( CFSG), which engages in the design, development, manufacture, and sale of fire protection products and services for industrial customers in China, from sell to hold. Strengths include its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, we find that the stock has had a generally disappointing performance in the past year.
Revenue is up 44.4% since the same quarter a year ago. The company has no debt to speak of and has a quick ratio of 2.3, demonstrating its ability cover short-term liquidity needs. Net income increased by 47% to $6.4 million, significantly outperforming the
and the machinery industry.
Shares are down 37.9% year over year, apparently dragged down, in part, by the decline in the S&P 500. But don't assume that it can now be tagged as cheap and attractive. Based on its current price in relation to its earnings, CFSG is still more expensive than most of the other companies in its industry.
( CRA), which delivers personalized disease management through a combination of products and services, from hold to sell, driven its deteriorating net income, disappointing return on equity, decline in the stock price during the past year and feeble growth in its earnings per share.
Net income decreased from about $670,000 in the same quarter last year to -$7 million, underperforming the S&P 500 and the biotechnology industry. Return on equity has also greatly , a signal of major weakness within the corporation. Celera's gross profit margin of 71.5% is very high, though it has decreased significantly since the same period last year. Its net profit margin of -15.3% significantly underperformed the industry average.
Earnings per share are down 1,000% in the most recent quarter compared with the same quarter last year. The company has reported a trend of declining earnings per share over the past year, but the consensus estimate suggests that this trend should reverse in the coming year. Shares plunged 30.6% over the past year, with the silver lining that the broader market's performance was even worse. 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 generation, transmission, distribution, and sale of electric energy, from hold to buy, driven by its revenue growth, growth in earnings per share, increase in net income and relatively strong performance when compared with the S&P 500 during the past year. We feel these strengths outweigh the fact that the company has had generally poor debt management on most measures that we evaluated.
Revenue rose by 17.7% since the same quarter last year, outperforming the industry average of 6.5% growth and helping boost EPS, which are up 44.4%. The company has demonstrated a pattern of positive earnings per share growth over the past two years, which we feel should continue. During the past fiscal year, it increased its bottom line by earning $3.28 vs. $3.23 in the prior year. This year, the market expects an improvement in earnings to $3.85. Net income is up 45.2% compared with the year-ago quarter, outperforming the S&P 500 and the electric utilities industry. FPL's gross profit margin of 30.9% is currently lower than what is desirable, but it has managed to increase from the same period last year. Its net profit margin of 14.40% compares favorably with the industry average.
Shares are off by a sharp 29.7% year over year, but that decline was not as bad as the broader market's.The fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it is one of the factors that makes this stock an attractive investment.
Turkcell Iletisim Hizmetleri
, which provides mobile telecommunication services, including mobile voice and data services over its GSM network, in Turkey, from hold to buy. This rating is driven by the company's robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
Revenue rose by 19.6% since the same quarter a year ago, compared with the industry average of 181.6% growth. The company's debt-to-equity ratio is very low at 0.1 and is currently below that of the industry average, implying very successful management of debt levels, and it has a quick ratio of 1.95, which demonstrates an ability to cover short-term liquidity needs. Current return on equity exceeded its ROE from the same quarter one year prior, a clear sign of strength within the company.
EPS are up significantly in the most recent quarter compared with the same quarter last year. The company has demonstrated a pattern of positive EPS growth over the past two years, which we feel should continue. During the past fiscal year, Turkcell increased its bottom line by earning $1.54 vs. $1.00 in the prior year. This year, the market expects an improvement in earnings to $2.11.
, which engages in refining and marketing petroleum products, from sell to hold. Strengths include its robust revenue growth, good cash flow from operations and increase in net income. However, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and generally poor debt management.
Revenue rose by 48.2% since the same quarter last year, outperforming the industry average of 29%. Net income rose by 451.1%, to $259 million. Return on equity, however, decreased, a signal of major weakness. Shares are down 66.9% on the year, which is worse that the performance 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. Despite the heavy decline in its share price, this stock is still more expensive (when compared with its current earnings) than most other companies in its industry.
Other ratings changes include
, downgraded from hold to sell, and
, also downgraded from hold to sell.
All ratings changes generated on Jan. 8 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.