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 company earnings forecasts. Objective elements include volatility of past operating revenue, financial strength and company cash flows.

Dynatronics ( DYNT) designs, manufactures and markets physical medical products. It has been upgraded to a hold from a sell. The company's stock price has increased by 13.28% over the past 12 months, and looking ahead, its fundamentals will not have much impact in either direction. Dynatronics' net income grew to $220,000 in the fourth quarter of its fiscal year 2007, more than five times the $40,000 it reported a year earlier. Its gross profit margin of 46.10% is strong and has increased from the same quarter the previous year. The company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. Dynatronics had been rated a sell since May 2007.

Financial services provider Hingham Institution for Savings ( HIFS) has been upgraded to a hold from a sell. The company's revenue rose by 15.4% in the second quarter compared with the same period last year, and its net profit margin of 10.10% compared favorably to the industry average. Hingham's earnings dipped to 51 cents a share in the second quarter compared with 52 cents per share in the same period last year, continuing a trend of declining EPS in the last two years. Its stock has dipped 15.88% in the past 12 months, though this is not necessarily a negative. In could be one of the factors that makes the stock attractive down the road. Hingham Institution for Savings had been rated a sell since June 2007.

Inverness Medical Innovations ( IMA) develops and markets in vitro diagnostic products. It has been upgraded to a hold from a sell. The company's stock price has increased by 56.43% in the last 12 months, and the hold rating indicates that TheStreet.com Ratings do not recommend additional investment at this time. While revenue increased by 10.9% in the second quarter compared with the same period last year, it trailed the industry average of 11.6%. Inverness' debt-to-equity ratio of 1.30 is relatively high compared with the industry average, suggesting a need for better debt management. The company has reported somewhat volatile earnings lately, and posted a loss of $1.17 per share in the second quarter compared a loss of 33 cents per share in the same period last year. Inverness Medical Innovations had been rated a sell since August 2007.

Specialty technology products manufacturer ScanSource ( SCSC) had been upgraded to a buy from a hold. The company's revenue rose by 13.7% in the fourth quarter of fiscal 2007 compared with the same period last year, outpacing the industry average of 4.3%. Its debt-to-equity ratio of 0.34 is low and below the industry average, implying that there has been successful management of debt. ScanSource's earnings per share declined to 43 cents a share in the fourth quarter compared with 49 cents a share in the same period last year, and the company has reported somewhat volatile earnings recently. But TheStreet.com Ratings believe it is poised for EPS growth in the coming year. These strengths outweigh the company's subpar net income growth. ScanSource had been rated a hold since January 2007.

Eldorado Gold ( EGO) develops, produces and explores for gold primarily in Turkey and China. It has been upgraded to a buy from a hold. The company's revenue grew by 580.3% in the second quarter compared with the same period last year, and its debt-to-equity ratio of 0.11 is below that of the industry average, implying that there has been very successful management of debt levels. Net income rose to $26.73 million in the second quarter compared with $220,000 in the same period last year, and its net profit margin of 35.70% significantly outperformed against the industry average. Eldorado Gold had been rated a hold since May 2006.

Aaron Rents ( RNT) leases and sells consumer electronics, furniture and household appliances in the U.S. and Canada. It has been downgraded to a hold from a buy. The company's strengths include an increase in revenue of 13.1% in the second quarter, higher than the industry average. Aaron Rents' debt-to-equity ratio of 0.19 is also better than that of the specialty retail industry, implying that there has been successful management of debt. However, net income decreased by 4.8% to $19.66 million in the second quarter compared with the same period last year, and its net profit margin of 5.50% trails the industry average. Its stock price has declined by 12.49% in the last 12 months, and while the lower price might make the stock an attractive buy down the line, right now it is too soon to buy. Aaron Rents had been rated a buy since October 2005.

Hawaiian commercial bank Central Pacific Financial ( CPF) has been downgraded to a hold from a buy. The company's revenue rose by 11.5% in the second quarter compared with the same period last year, which appears to have trickled down to the bottom line. Its EPS improved to 68 cents per share in the second quarter compared with 66 cents per share in the same period last year, continuing a pattern of positive EPS growth in the past two years. This trend should continue. Central Pacific's stock has fallen by 33.45% in the past 12 months, and based on its current price in relation to its earnings, the stock is still more expensive than most of the others in its industry. The company had been rated a buy since October 2005.

Through its subsidiaries, International Assets Holding ( IAAC) offers a range of financial services with a focus on international markets. It has been downgraded to a sell from a hold. The company swung to a loss of $3.74 million in the third quarter compared with a profit of $3.29 million in the same period last year. Although its debt-to-equity ratio of 7.90 is very high, it is currently less than that of the industry average. It also shows a disappointing return on equity, poor profit margins and weak operating cash flow. International Assets Holding had been rated a hold since September 2005.

TheStreet.com Ratings has initiated coverage of Townebank ( TOWN), which offers commercial and retail banking services through its subsidiaries. It has been rated a hold. The company's revenue increased by 23.3% in the second quarter compared with the same period last year, which appears to have trickled down to the bottom line. Earnings increased to 23 cents per share in the second quarter compared with 22 cents a share in the same period last year. Net operating cash flow increased by 123.86% to $5.29 million over the same timeframe, while return on equity improved to 9.67% from 8.73% in the second quarter of 2006. Townebank's stock price has gone up by 2.50% in the last 12 months, and it is at a level that is relatively expensive compared with the rest of its industry, implying reduced upside potential.

Stock Upgrades, Downgrades
Company Name Ticker Change New Rating Former Rating
Aaron Rents RNT Downgrade Hold Buy
Central Pacific Financial CPF Downgrade Hold Buy
Dynatronics DYNT Upgrade Hold Sell
Hingham Institution for Savings HIFS Upgrade Hold Sell
International Assets Holdings IAAC Downgrade Sell Hold
Inverness Medical Innovations IMA Upgrade Hold Sell
Scansource SCSC Upgrade Buy Hold
Eldorado Gold EGO Upgrade Buy Hold
Townebank TOWN Initiation Hold n/a
Source: TheStreet.com Ratings

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