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. BankUnited Financial ( BKUNA) operates as a holding company for BankUnited, FSB, which provides consumers and commercial banking products primarily in Florida. It has been downgraded to sell from hold.
Coach ( COH) designs accessories and gifts for men and women. It has been downgraded to hold from buy. The company's revenue grew by 27.8% in the first quarter of its fiscal 2008 compared with the same period last year, outpacing the industry average of 10.8%. Coach is carrying no debt and maintains a quick ratio of 3.44, which demonstrates its ability to cover short-term cash needs. The company has also displayed an impressive record of earnings per share growth. However, Coach's share price has fallen by 28.9% in the last 12 months, and we believe it is currently too soon to buy despite the depressed price. Coach had been rated a buy since December 2005. Alliance One International ( AOI) sells leaf tobacco around the world. It has been upgraded to a hold from a sell. The company's earnings grew to 20 cents a share in the second quarter of its fiscal 2008 compared with 10 cents per share in the same period a year earlier, continuing a pattern of positive EPS growth over the past year. This trend is likely to continue, and suggests that the performance of the business is improving. However, its revenue fell by 1.2% in the second quarter compared with the same period last year, and its stock price has gone down by 33.93% in the last 12 months. Investors have so far failed to pay attention to the earnings improvements the stock has managed to achieve over the last quarter. Despite the heavy decline, the stock is still more expensive (when compared with its current earnings) than most others in its industry. The company also carries a very high debt-to-equity ratio of 4.22, implying that there is very poor management of debt levels within the company. Alliance One had been rated a sell since November 2007.
Riviera Holdings ( RIV), through its subsidiaries, owns and operates the Rivieria Hotel and Casino in Las Vegas, and the Riviera Black Hawk Casino in Black Hawk, Colo. It has been upgraded to a hold from a sell. The company's third-quarter revenue increased 4.0% compared with the same period last year, and regardless of the somewhat mixed results of its debt-to-equity ratio, the company's quick ratio of 1.45 is sturdy. Riviera has experienced somewhat volatile earnings recently, but we feel it is poised for EPS growth in the coming year. However, its net losses in the third quarter deepened to $18.25 million from $430,000 in the same period last year. Riviera had been rated a sell since November, prior to which it had been rated a hold since December 2005. United Natural Foods ( UNFI) sells natural and organic foods in the U.S. It has been upgraded to buy from hold. The company's revenue increased 13.9% in the first quarter of its fiscal 2008 compared with the same period last year, growth which appears to have trickled down to the company's bottom line. United Natural Foods' first-quarter earnings increased 10.3% to 32 cents a share from 29 cents per share, continuing a two-year pattern of positive EPS growth. The company also demonstrates reasonable valuation levels. Its stock price has fallen by 17.6% in the last 12 months, but this should not be interpreted as a negative. In fact, it is one of the factors that makes this stock an attractive investment. Given its other strengths, the company's somewhat disappointing return on equity is not a concern. United Natural Foods had been rated a hold since July 2007.
TheStreet.com Ratings has initiated coverage on Quantum Group ( QGP), which sells services, products and technology industry in the United States. It has been rated a sell. The company lost $1.89 per share in the third quarter compared with a loss of $1.75 in the same period last year. Its stock price has fallen by 68.71% in the last 12 months, and while it is now cheaper (in proportion to its earnings over the past year) than most other stocks in its industry, it is not a good buy right now due to other concerns. Even though its debt-to-equity ratio is mixed, the company's quick ratio of 0.15 is very low, and demonstrates very weak liquidity. Quantum also shows weak operating cash flow and deteriorating net income. TheStreet.com Ratings also initiated coverage of International Royalty ( ROY), which owns interests in mineral properties around the world. It has been rated a sell. Its third-quarter earnings fell to two cents a share from three cents a share in the same period last year. International Royalty underperformed against the industry and significantly underperformed against the S&P 500 in terms of return on equity. TheStreet.com Ratings also initiated coverage of Akeena Solar ( AKNS), which designs and sells solar power systems for residential and small business customers in the U.S. It has been rated a sell. The company's third-quarter losses widened to $3.72 million, or 16 cents per share, from a loss of $400,000, or four cents a share, in the same period last year. Akeena Solar's gross profit margin of 22.5% is low and has decreased since the same quarter last year, and its return on equity trails that of both the electrical equipment industry average and the S&P 500.