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 forecast company earnings. Objective elements include volatility of past operating revenue, financial strength and company cash flows. Online jewelry retailer Blue Nile ( NILE) has been downgraded to a hold from a buy. The company's gross profit margin has fallen over the past year, and the net profit margin is below the internet retail industry average. Blue Nile had a negative net operating cash flow in the first quarter of fiscal 2007. The company's stock price shot up 56.5% over the past 12 months, and at this point it trades at a premium valuation to many of its peers. Blue Nile had been rated a buy since February 2007. TheStreet.com Ratings has initiated coverage of PHH ( PHH) with a sell rating. The company is an outsource provider of mortgage and fleet management services. It was spun off from Cendant in 2005. The company lost 13 cents per share in the third quarter of fiscal 2006 after gaining 90 cents per share in the third quarter of 2005. The market is expecting a further contraction in earnings in the coming year. The company's debt-to-equity ratio is currently very high at 4.8.