BOSTON (

TheStreet

) -- TheStreet.com's stock-rating model upgraded

Cabot Oil & Gas

(COG) - Get Report

to "buy."

The numbers

: Second-quarter net income fell 53% to $26 million, or 24 cents a share. Revenue declined 18% to $205 million. Cabot's gross margin increased from 73% to 78%, but its operating margin fell from 38% to 35%. The company has weak liquidity, evident in its quick ratio of 0.3. A debt-to-equity ratio of 0.4 indicates conservative leverage.

The stock

: Cabot is up 53% this year, beating major U.S. indices. The stock trades at a price-to-earnings ratio of 22, a premium to the market, but a discount to oil and gas peers. The shares pay a 0.3% dividend yield.

The model initiated coverage of media company

Discovery Communications

(DISCK) - Get Report

at "hold."

The numbers

: Second-quarter net income rose 330% to $185 million and earnings per share jumped 169% to 43 cents. Revenue declined marginally to $881 million. Discovery's gross margin fell from 71% to 70%, but its operating margin jumped from 26% to 31%. A quick ratio of 0.9 reflects less-than-ideal liquidity. A debt-to-equity ratio of 0.6 indicates reasonable leverage.

The stock

: Discovery shares have doubled this year, outpacing major U.S. indices. The stock trades at a price-to-earnings ratio of 21, on par with the market, but a discount to broadcasting peers. The company doesn't pay dividends.

The model upgraded

Eaton Corp.

(ETN) - Get Report

, a maker of electrical systems and machinery, to "buy."

The numbers

: Third-quarter profit dropped 39% to $193 million, or $1.14 a share, as revenue fell 26% to $3 billion. Eaton's gross margin dropped from 32% to 28%, and its operating margin declined from 9% to 7%. A quick ratio of 0.9 reflects less-than-ideal liquidity. But a debt-to-equity ratio of 0.5 is less than the industry average, indicating restrained leverage.

The stock

: Eaton has risen 28% this year, more than the

Dow Jones Industrial Average

and

S&P 500 Index

. The stock trades at a price-to-earnings ratio of 32, a premium to the market and machinery peers. Shares pay a 3.1% dividend yield.

The model downgraded regional bank

FirstMerit

(FMER)

to "hold."

The numbers

: Second-quarter net income dropped 47% to $16 million and earnings per share fell 64% to 13 cents, hurt by a higher share count. Revenue declined 9% to $167 million. FirstMerit's gross margin rose from 66% to 67%, but its operating margin declined from 31% to 30%. The company is adequately capitalized, with $157 million of cash. A debt-to-equity ratio of 2 indicates excessive leverage.

The stock

: FirstMerit is down 4% this year, lagging behind major U.S. indices. The stock trades at a price-to-earnings ratio of 16, a discount to the market and regional banks. The shares pay a 3.3% dividend yield.

The model downgraded

Landstar System

(LSTR) - Get Report

to "hold."

The numbers

: Third-quarter net income decreased 39% to $20 million, or 39 cents a share. Revenue fell 32% to $501 million. Landstar's gross margin rose from 20% to 22%, but its operating margin declined from 7% to 6%. A quick ratio of 1.6 demonstrates adequate liquidity. A debt-to-equity ratio of 0.4 is below the industry average, indicating restrained leverage.

The stock

: Landstar is down 3% this year, trailing major U.S. indices. The stock trades at a price-to-earnings ratio of 25, a premium to the market and trucking peers. The shares pay a 0.5% dividend yield.

-- Reported by Jake Lynch in Boston.