The following ratings changes were generated on Tuesday, Nov. 11.

We've downgraded

Discover Financial Services

(DFS) - Get Report

from hold to sell, driven by its generally disappointing historical performance in the stock itself and poor profit margins.

Discover's gross profit margin is rather low at 22.7%, having decreased significantly from the same period last year. Net profit margin of 11.5%, however, is above the industry average. Net income has decreased by 11% since the same quarter a year ago, to $180.05 million. Earnings per share declined by 27.4%. Shares are down 38.38% on the year, reflecting the overall decline in the broad market as well as the decline in the company's EPS. Don't assume, though, that it can now be tagged as cheap and attractive. Based on its current price in relation to its earnings, DFS is still more expensive than most of the other companies in its industry.

We've downgraded

Legg Mason

(LM) - Get Report

from hold to sell, driven by its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

EPS declined steeply, by 160.16%, in the most recent quarter compared with the same quarter a year ago. During the past fiscal year, Legg Mason reported lower earnings of $1.81 vs. $4.48 in the prior year, and the market is expecting a further contraction for the next year of 87.8% to 22 cents. Net income is down 158.5% from the same quarter a year ago, underperforming the

S&P 500

and the capital markets industry. Return on equity has greatly decreased, as well, also underperforming the S&P 500 and the industry average. Net operating cash flow has significantly decreased to -$529.12 million, or 228.37% when compared with the same quarter last year. The firm's growth rate is lower than the industry average.

Shares are down 76.02%, underperforming the S&P 500. This is not necessarily negative and 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 upgraded

PDL Biopharma

(PDLI) - Get Report

from sell to hold. Strengths include its revenue growth, notable return on equity and impressive record of earnings per share growth. Weaknesses include a generally disappointing performance in the stock itself and generally poor debt management.

Revenue growth of 26.3% since the same quarter a year ago outpaced the industry average of 17.2% and appears to have helped boost EPS. The company reported significant earnings per share improvement in the most recent quarter and has demonstrated a pattern of positive EPS growth over the past two years, a trend we feel should continue, suggesting improving business performance. During the past fiscal year, PDL Biopharma earned -17 cents, vs. -$1.13 in the prior year. This year, the market expects an improvement in earnings to 80 cents.

PDL's gross profit margin of 23.4% is rather low, but it has increased significantly over the same period last year. Net profit margin of 72% significantly outperformed the industry average. The debt-to-equity ratio is very high at 7.55 and currently higher than the industry average, implying very poor management of debt levels within the company, but the company has managed to keep a very strong quick ratio of 8.11, which shows the ability to cover short-term cash needs.

Shares are down 49.02%, 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.

We've downgraded

Tiffany

(TIF) - Get Report

from hold to sell, driven by a generally disappointing historical performance in the stock itself.

The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying successful management of debt levels. The quick ratio, which is currently 0.54, displays a potential problem in covering short-term cash needs. Current return on equity exceeded its ROE from the same quarter one year prior, a clear sign of strength within the company. ON the basis of ROE, Tiffany outperformed the S&P 500 but underperformed the industry average. Tiffany's gross profit margin of 62.7% is rather high, having increased from the same quarter a year ago. Along with this, the net profit margin of 11.00% is above that of the industry average. Net operating cash flow has slightly increased to $76.81 million, or 1.97% when compared with the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -26.56%

Shares are down 48.32% on the year, which is worse than the S&P 500's performance. This 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

VF Corp.

(VFC) - Get Report

from buy to hold. Strengths include its growth in earnings per share, increase in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, a decline in the stock price during the past year and disappointing return on equity.

VF Corp. has improved earnings per share by 12.9% 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 two years, which we feel should continue, suggesting improving business performance. During the past fiscal year, it increased its bottom line by earning $5.42 vs. $4.73 in the prior year, and this year, the market expects further improvement to $5.85. Net income rose 12.9% when compared with the same quarter last year, outperforming the S&P 500 and the textiles, apparel and luxury goods industry. Its debt-to-equity ratio of 0.40 is low but is higher than that of the industry average, and the company's quick ratio of 1.09 is sturdy. Net operating cash flow has significantly decreased to -$3.53 million, or 104.95% when compared with the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

Shares are down 36.24% on the year, apparently dragged down in part by the decline in 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.

Other ratings changes include

AgFeed

( FEED), downgraded from hold to sell, and

Webster Financial

(WBS) - Get Report

, downgraded from hold to sell.

All ratings changes generated on Nov. 11 are listed below.

Ticker

Company

Current

Change

Previous

ATHR

Atheros

HOLD

Downgrade

BUY

BMI

Badger Meter

HOLD

Downgrade

BUY

BWP

Boardwalk Pipeline

BUY

Upgrade

HOLD

CHU

China Unicom

HOLD

Downgrade

BUY

CIR

Circor

HOLD

Downgrade

BUY

CPL

CPFL Energia

HOLD

Downgrade

BUY

DFS

Discover Financial

SELL

Downgrade

HOLD

FEED

AgFeed Industries

SELL

Downgrade

HOLD

FFNW

First Financial NW

SELL

Initiated

GNET

Global Traffic Network

SELL

Downgrade

HOLD

IRBT

IRobot

HOLD

Upgrade

SELL

ITEX

Itex

SELL

Downgrade

HOLD

LM

Legg Mason

SELL

Downgrade

HOLD

LTC

LTC Properties

HOLD

Downgrade

BUY

LZR

Emergent Group

BUY

Upgrade

HOLD

MGG

Magellan Midstream

HOLD

Upgrade

SELL

NNN

National Retail

HOLD

Downgrade

BUY

NPSP

NPS Pharmaceuticals

SELL

Downgrade

HOLD

PCH

Potlatch

HOLD

Downgrade

BUY

PDLI

PDL Biopharma

HOLD

Upgrade

SELL

SCHW

Charles Schwab

HOLD

Downgrade

BUY

SIF

Sifco Industries

SELL

Downgrade

HOLD

TGH

Textainer Group

SELL

Initiated

TIF

Tiffany

SELL

Downgrade

HOLD

VFC

VF Corp.

HOLD

Downgrade

BUY

WBS

Webster Financial

SELL

Downgrade

HOLD

WSO.B

Watsco

SELL

Downgrade

HOLD

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.

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