TSC Ratings' Upgrades, Downgrades: PRU

ITT Educational Services, Prestige Brands, Siebert Financial upgraded; Prudential, D. R. Horton downgraded.
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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 June 12.

ITT Educational Services

(ESI) - Get Report

, which provides postsecondary degree programs, has been upgraded to buy. The company's revenue growth has slightly outpaced the industry average of 5.5%, coming in at 15%. For the most recent quarter, net income increased 55% year over year to $42.63 million. The gross profit margin is rather high at 63%. The company's current return on equity greatly increased from the same quarter, a signal of strength within the corporation. ITT Educational had been rated hold since March 11.

Prestige Brands

(PBH) - Get Report

, which sells over-the-counter health care drugs, household cleaning and personal care products, has been upgraded to buy. Net income increased 23% year over year to $10.4 million. Prestige Brands' revenue growth trails the industry average of 17%, coming in at 3.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share. The debt-to-equity ratio is somewhat low at 0.86, implying successful management of debt levels. The quick ratio of 1.33 illustrates an ability to avoid short-term cash problems. Prestige Brands operates with a rather high gross margin of 51%. It also has favorable net profit margin of 13%, which is above the industry average. Prestige Brands had been rated hold since Feb. 12.

Siebert Financial

(SIEB) - Get Report

, which offers Internet and traditional discount brokerage and related services to retail investors, has been upgraded to buy. The revenue growth greatly exceeded the industry average of 48.1%, slightly increasing by 0.3% year over year. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share. Siebert Financial has no debt to speak of and a quick ratio of 6.59, which is quite favorable. Net income increased 81% from the year-ago quarter to $1.2 million. Net operating cash flow has nearly quadrupled to $920,000 when compared to the same quarter last year. Seibert Financial had been rated hold since Dec. 18.

Prudential

(PRU) - Get Report

, which provides financial products and services, was downgraded to hold. For the most recent quarter, net operating cash flow has increased 96% year over year to $1.35 billion. Net income has decreased to $69 million from $1.12 billion in the year-ago quarter. The debt-to-equity ratio of 1.77 is quite high, suggesting that the current management of debt levels should be re-evaluated. Prudential Financial had been rated a buy since June 9, 2008.

D. R. Horton

(DHI) - Get Report

, a homebuilding company, has been downgraded to sell. During the past fiscal year, the company swung to a loss of $2.27 a share from a profit of $3.90 a year ago. For the coming year, the market expects the loss to widen to $4.93. Net Income has significantly decreased to a loss of $1.31 billion from a profit of $51.7 million. In comparison to its competitors, for the past two years, the company's EPS has been declining. We feel this trend should continue. D. R. Horton had been rated hold since April 29.

Additional ratings changes from June 12 are listed below.

Ticker

Company Name

Change

New Rating

Former Rating

DHI

D. R. Horton

Downgrade

Sell

Hold

ESI

ITT Educational Services

Upgrade

Buy

Hold

ISRL

Isramco

Downgrade

Sell

Hold

JHX

James Hardie Industries

Downgrade

Sell

Hold

PBH

Prestige Brands

Upgrade

Buy

Hold

PRU

Prudential

Downgrade

Hold

Buy

RENT

Rentrak

Upgrade

Buy

Hold

SIEB

Siebert Financial

Upgrade

Buy

Hold

STEI

Stewart Enterprises

Upgrade

Buy

Hold

WACLY

Wacoal Holdings

Downgrade

Hold

Buy

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