Each weekday, 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 forecasted company earnings. Objective elements include volatility of past operating revenue, financial strength and company cash flows.
Real estate investment trust
has been downgraded to a sell from a hold. The company's holdings consist primarily of office buildings and parking garages in California and Colorado. The company lost 27 cents per share in the first quarter of fiscal 2007 after earning $1.84 per share during the same quarter a year ago. The gross profit margin for Maguire Properties fell during that same time period. TheStreet.com Ratings feels the current 6.9 debt-to-equity ratio is a sign the company has done a poor job managing its debt. MOG had been rated a hold since June 2006.
Product packaging manufacturer
has been downgraded to a hold from a buy. The company swung to a loss in terms of earnings in the first quarter of fiscal 2007 compared to the same quarter a year ago. Return on equity is just 2.1%, far lower than the paper and forest products industry average of a little less than 8%. MeadWestvaco had been rated a buy since November 2006.
( STTS) has been downgraded to a hold from a buy. The company's gross profit margin has decreased significantly over the past year, falling to 19.9% in the first quarter of fiscal 2007 from 37.8% in Q1 2006. Powered by strong earnings, Stats ChipPAC's stock price surged 42.5% in just the past three months. However, TheStreet.com Ratings feels shares have now become relatively expensive compared with the rest of the industry. STTS had been rated a buy since April 2007.
Inverness Medical Innovations
( IMA) has been downgraded to a hold from a buy. The company makes over-the-counter pregnancy and fertility tests, in addition to other diagnostic products. Inverness has a negative return on equity of 0.8%. This figure is much weaker than the industry average of 22.4%. IMA had been rated a buy since March 2007.
Agricultural equipment maker
has been boosted to a buy from a hold. The company's revenue jumped 41.6% in the first quarter of fiscal 2007 compared to the same quarter a year ago. The stock price has followed along, increasing 54.2% in the past 12 months. The company is in a largely solid financial position with reasonable debt levels by most measures. Agco had been rated a hold since November 2006.
Some recent rating changes are highlighted below.