Each business day, 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.

American Vanguard ( AVD), a specialty chemical maker, has been downgraded to hold. The company's strengths can be seen in multiple areas, including strong revenue growth, a largely solid financial position with reasonable debt levels and reasonable valuation levels. However, the stock's performance has been generally disappointing, the company's return on equity is inadequate and its operating cash flow is weak.

Third-quarter net sales increased 11% from a year ago to $56.6 million, while net income climbed 28% to $5.4 million. EPS totaled 20 cents a share, up from 16 cents a year ago. This company has reported somewhat volatile earnings recently, but TheStreet.com Ratings feels it is poised for EPS growth in the coming year. American Vanguard had been rated buy since September.

Department store operator The Bon-Ton Stores ( BONT) has been downgraded to sell as it struggles with unimpressive growth in net income, generally weak debt management, disappointing historical stock performance and feeble EPS growth.

Bon-Ton posted a third-quarter loss of $19.4 million, or $1.17 a share, wider than the year-ago loss of $10.9 million, or 66 cents a share. Sales slipped 3% to $780.8 million. Despite any intermediate fluctuations, there is only bad news to report on this stock's performance over the past year, as it has tumbled by 71.48%.

The stock's sharp decline could be seen as a positive for future investors, as it is now cheaper than most other stocks in its industry. But due to other concerns, the stock does not appear to be a good buy now. Bon-Ton Stores had been rated hold since August 2006.

Cato ( CTR), a women's fashion specialty retail store operator, has been downgraded to hold. While the company is reasonably valued, it is also marked by deteriorating net income, disappointing return on equity and poor profit margins.

Third-quarter income was cut in half year-over-year to $2.9 million, or 9 cents a share, but still beat analyst estimates by a penny a share. Same-store sales, or sales from stores open a year or more, were down 5% from 2006, and the gross margin rate decreased to 31% from 32% last year. Cato has significantly underperformed when compared to the specialty retail industry.

This company has reported somewhat volatile earnings recently and it is likely to report a decline in earnings in the coming year. Cato had been rated buy since November 2005.

Wet Seal ( WTSLA), a women's specialty retailer, has been downgraded to sell due to its generally disappointing historical stock performance, unimpressive net income growth and poor profit margins. The company swung to a third-quarter loss of $3.3 million, or 4 cents a share, compared with earnings of $2.4 million, or 2 cents a share, a year ago. Same-store sales slipped 3.4% for the quarter.

Wet Seal has significantly underperformed when compared with the specialty retail industry, and its stock has tumbled by 68.61% over the past year. This company has reported somewhat volatile earnings recently. However, TheStreet.com Ratings believes it is poised for EPS growth in the coming year. The company's current return on equity greatly increased from a year ago, a signal of significant strength within the corporation. Wet Seal had been rated hold since May.

Insight Enterprises ( NSIT), a hardware and software distributor, has been downgraded to hold. While the company has seen robust revenue growth and holds a solid financial position with reasonable debt and valuation levels, it has also been marked by unimpressive net income growth, a generally disappointing stock performance and poor profit margins.

Third-quarter earnings totaled $9.1 million, or 18 cents a share, down from $17.2 million, or 35 cents a share, a year ago. The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared with the electronic equipment and instruments industry. Revenue increased 29% to $1.11 billion, higher than the industry average of 4.5%. Insight Enterprises had been rated buy since August.

Additional ratings changes are listed below.


Stock Upgrades, Downgrades
Company Name Ticker Change New Rating Former Rating
American Vanguard AVD Downgrade Hold Buy
Bon-Ton Stores BONT Downgrade Sell Hold
Cato CTR Downgrade Hold Buy
CCF Holding CCFH Downgrade Hold Buy
ESB Financial ESBF Downgrade Sell Hold
Hastings Entertainment HAST Downgrade Hold Buy
Insight Enterprises NSIT Downgrade Hold Buy
Kforce KFRC Downgrade Hold Buy
LSB LSBX Downgrade Sell Hold
MFB MFBC Downgrade Sell Hold
PFF Bancorp PFB Downgrade Sell Hold
QCR Holdings QCRH Downgrade Sell Hold
Repligen RGEN Upgrade Buy Hold
Triad Guaranty TGIC Downgrade Sell Hold
Wet Seal WTSLA Downgrade Sell Hold
Conn's CONN Downgrade Hold Buy
Kenexa KNXA Downgrade Sell Hold
Source: TheStreet.com Ratings

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