Ratings Changes: Brookline Bancorp, Cott - TheStreet

TheStreet.com Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking total return performance.

TheStreet.com's stock-rating model upgraded

Brookline Bancorp

(BRKL) - Get Report

, a community bank in Greater Boston, to "buy."

The numbers

: Second-quarter revenue increased 3% to $37 million as net income grew 27% to $4.7 million and earnings per share climbed 33% to 8 cents. The operating margin rose from 27% to 29% and the net margin jumped from 10% to 12%. The cash balance has increased 12% to $116 million since the year-ago quarter. But a debt-to-equity ratio of 1.3 demonstrates higher-than-ideal leverage. Our model prefers companies with debt-to-equity ratios less than 1.

The stock

: Brookline Bancorp has decreased 2% in 2009, underperforming the

Dow Jones Industrial Average

and the

S&P 500 Index

. The stock trades at an expensive price-to-earnings ratio of 42, but offers an attractive 3.3% dividend yield.

The model upgraded soft-drink maker

Cott

(COT) - Get Report

to "hold."

The numbers

: First-quarter revenue fell 6% to $367 million as the company swung to a net profit of $20 million, or 28 cents, from a loss of $21 million, or 30 cents, in the year-earlier period. The operating margin climbed from negative territory to 8% and the net margin rose to 5%.

Cott's balance sheet remains a concern. The cash balance has halved to $11 million since last year's second quarter. A quick ratio of 0.7 indicates weak liquidity and a debt-to-equity ratio of 1.6 reflects high leverage.

The stock

: Cott has surged 430% this year, outperforming all major U.S. indices. The stock is still trading at a vast discount to other soft-drink companies on the basis of book value, sales and cash flow. Cott doesn't pay dividends.

The model upgraded

JDA Software Group

( JDAS) to "buy." The company provides software to other firms around the world.

The numbers

: Second-quarter revenue increased 8% to $99 million as net income surged 191% to $9 million and earnings per share climbed 177% to 25 cents, hurt by a higher share count. The operating margin jumped from 10% to 17% and the net margin expanded from 3% to 9%. Zero debt and a quick ratio of 1.2 reflect JDA's impressive financial position.

The stock

: JDA Software is up 61% in 2009, outperforming all major U.S. indices. The stock trades at a premium valuation and doesn't pay dividends.

The model upgraded

NetScout Systems

(NTCT) - Get Report

to "buy." The company develops, manufactures and sells application and network performance management solutions worldwide.

The numbers

: Fiscal fourth-quarter revenue increased 15% to $66 million as the company swung to a profit of $6 million, or 14 cents, from a loss of $5 million, or 13 cents, in the year-earlier period. The operating margin ascended from negative territory to 15% and the net margin improved to 9%. The company has a strong balance sheet, demonstrated by a quick ratio of 1.3 and debt-to-equity ratio of 0.4.

The stock

: NetScout has increased 11% this year, outperforming the Dow and S&P 500. The stock trades at a costly price-to-earnings ratio of 20. The company doesn't pay dividends.

The model downgraded

Sun Bancorp

(SNBC)

to "sell."

The numbers

: Second-quarter revenue fell 22% to $40 million as the company swung to a net loss of $5 million, or 38 cents, from a profit of $2.3 million, or 10 cents, in the year-earlier period. The operating margin and net margin fell into negative territory. Sun Bancorp's cash balance has dropped 37% to $40 million since the year-ago quarter. But a debt-to-equity ratio of 0.7 demonstrates improved leverage.

The stock

: Sun Bancorp is down 31% this year, underperforming the Dow and S&P 500. The stock trades at a cheap price-to-earnings ratio of 11, but could be poised for further losses. The company doesn't pay dividends.