Ratings Changes: Disney, W.P. Carey - 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 solid outperformance on a total return basis.

TheStreet.com's stock-rating model downgraded

Walt Disney

(DIS) - Get Report

to "hold." The company operates as a diversified entertainment company worldwide.

The numbers

: Fiscal second-quarter revenue declined 7.2% from a year earlier to $8.1 billion as net income fell 46% to $613 million and earnings per share dropped 43% to 33 cents. Operating margin fell from 22% to 16% and net margin dropped from 13% to 7.6%. A debt-to-equity ratio of 0.4 indicates a modest debt load. But a quick ratio of 0.8 reflects less-than-ideal liquidity.

The stock

: Disney is down 1% this year, keeping pace with the

S&P 500 Index

. The stock trades at a low price-to-earnings ratio of 12 and offers a lackluster 1.6% dividend yield.

The model upgraded

PSS World Medical

( PSSI) to "buy." The company distributes medical products, equipment and billing services to health care providers in the U.S.

The numbers

: Fiscal fourth-quarter revenue decreased 4.9% to $469 million as net income fell 20% to $16 million and earnings per share dropped 16% to 26 cents. Operating margin fell from 6% to 5.7% as net margin fell from 3.9% to 3.3%. The company's cash balance has surged 338% since the year-ago quarter and stands strong at $92 million. A debt-to-equity ratio of 0.8 indicates conservative leverage.

The stock

: PSS World Medical is down 7% this year, underperforming the

Dow Jones Industrial Average

and the S&P 500. The stock trades at an expensive price-to-earnings ratio of 18 and doesn't pay dividends.

The model upgraded

SmartPros

(SPRO) - Get Report

to "buy." The company provides training and seminars for accountants, lawyers and finance professionals.

The numbers

: First-quarter revenue increased 12% to $4.4 million as net income rose to $300,000 and earnings per share increased to 1 cent from a net loss in the year-ago quarter. Operating margin increased to 0.6% from -6.2% and its net margin inched past breakeven. The company has a strong financial position, evident in its $7 million cash balance, quick ratio of 1.3 and zero debt.

The stock

: SmartPros has gained 72% this year, outperforming major U.S. indices. The stock trades at a low price to earnings ratio of 11 and does not pay dividends.

The model upgraded

Targa Resources Partners

(NGLS)

to "buy." The company gathers, processes and sells natural gas.

The numbers

: First-quarter revenue plunged 53% to $239 million as the company swung to a net loss of $2.1 million from a net profit of $25 million in last year's first quarter. Operating margin dropped from 6.6% to 3.1% and net margin dipped into negative territory. But the company has a strong financial position, having nearly tripled its cash reserves to $62 million since the year-ago quarter. A debt-to-equity ratio of 0.9 is acceptable, but not ideal.

The stock

: Targa is up 86% in 2009, outperforming all major U.S. indices. The stock trades at a fair price-to-earnings ratio of 12 and offers a 14% cash distribution yield. Cash distributions are taxed differently than dividends.

The model downgraded

W.P. Carey

(WPC) - Get Report

to "hold." The company manages investments and real estate funds, and provides long-term lease financing.

The numbers

: First-quarter revenue increased 8.5% to $62 million as net income climbed 3.5% to $18 million and earnings per share inched up 2.3% to 44 cents. Operating margin increased from 37% to 38%, but net margin dropped from 30% to 29%. The company has a low debt-to-equity ratio of 0.56 and $22 million of cash, indicating an adequate liquidity position.

The stock

: W.P. Carey is flat in 2009, outperforming the Dow and the S&P 500. The stock trades at a fair price-to-earnings ratio of 13 and offers a high 8.5% dividend yield.