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. Herman Miller ( MLHR) designs and distributes interior furnishings for a variety of settings. It has been upgraded to a buy from a hold. The company's strengths include its revenue growth, notable return on equity and good cash flow from operations. Herman Miller's earnings rose 19.6% to 67 cents per share in the second quarter of its fiscal 2008 compared with 56 cents a share in the same period last year. The company's stock price has fallen by 12.08% in the past 12 months, but given its other strengths, the price level presents an attractive buy opportunity. Herman Miller had been rated a hold since Nov. 13, prior to which it had been rated a buy since December 2005.
RF Monolithics ( RFMI) designs, manufactures and sells wireless products. It has been upgraded to a hold from a sell. The company swung to a gain of 1 cent per share in the first quarter of its fiscal year 2008 from a loss of 4 cents a share a year earlier. RF Monolithics has reported somewhat volatile earnings recently, but TheStreet.com Ratings feels it is poised for EPS growth in the coming year. Investors have taken note of its strong earnings growth, as its stock price has increased by 40.6% in the past 12 months. However, the hold rating indicates that we do not recommend additional investment at the current time. The company's return on equity has also been disappointing. RF Monolithics had been rated a sell since December 2006. Texas Capital Bancshares ( TCBI) operates as the holding company for Texas Capital Bank, which provides various banking and financial services in Texas. It has been downgraded to a hold from a buy.
The company's third-quarter revenue increased 18.7% compared with the same period last year, outpacing the industry average of 16.4%. Texas Capital's earnings rose to 33 cents a share from 30 cents a share over the same timeframe, continuing a two-year pattern of positive EPS growth. It also demonstrates good cash flow from operations. However, as a counter to these strengths, the company's return on equity is disappointing. In addition, its stock price has fallen by 11.45% in the last 12 months, and looking ahead, we do not see anything in the company's numbers that could change this one-year trend. Texas Capital had been rated a buy since December 2006.
PAB Bankshares ( PABK) is the holding company for the Park Avenue Bank, which provides banking products and services to commercial and individual customers in Georgia and Florida. It has been downgraded to a hold from a buy. The company's revenue increased 9.2% in the third quarter when compared with the same period last year, although this trailed the industry average of 16.4%. PAB Bankshares also demonstrates attractive valuation levels and expanding profit margins. As a counter to these strengths, the company's third-quarter net income fell 19.1% to $2.86 million, or 30 cents per share, from $3.53 million, or 36 cents per share, in the same period last year. It also displays weak operating cash flow and disappointing return on equity. PAB Bankshares had been rated a buy since December 2005. TheStreet.com Ratings has initiated coverage of InfoLogix ( IFLG), which provides mobile workforce technology to healthcare and commercial clients. It has been rated a sell. The company's weaknesses can be seen in multiple areas, including its feeble earnings growth, deteriorating net income, poor profit margins and a generally disappointing performance in the stock price. InfoLogix's share price has gone down by 61.84% in the last 12 months, and while its sharp decline could be a positive for future investors (in proportion to its earnings over the past year) than most other stocks in its industry, the stock is not a good buy right now.
TheStreet.com Ratings has also initiated coverage of SAIC ( SAI), a provider of scientific, engineering, systems integrations and technical services, primarily under U.S. government contracts. It has been rated a hold. The company's third-quarter revenue rose 13.6% compared with the same period last year, outpacing the industry average of 6.8%. Its debt-to-equity ratio of 0.69 is somewhat low overall, but is high when compared with the industry average, implying that its debt management needs to be evaluated further. SAIC's earnings rose by 30% to 26 cents a share in the third quarter compared with 20 cents per share in the same period last year. Earnings growth was a key factor in the stock price's 12.33% rise over the last 12 months, and looking ahead, TheStreet.com Ratings feels that the company's fundamentals will not have much impact in pushing the share price in either direction. As a counter to its strengths, SAIC's profit margins have been poor overall.