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. SunTrust Banks ( STI) is the holding company for SunTrust Bank, which provides financial services to consumer and corporate customers. It has been downgraded to hold from buy.
The McGraw-Hill Companies ( MHP) sells information services and products to the education, financial services and business information markets worldwide. It has been downgraded to hold from buy. The company's third-quarter revenue increased 9.8% compared with the same period last year, exceeding the industry average of 8.0%. McGraw-Hill's earnings rose 26.4% to $1.34 per share from $1.06 a share over the same time frame. This continued a two-year pattern of EPS growth, a trend TheStreet.com Ratings believes will continue. The company's debt-to-equity ratio is somewhat low at 0.77, and less than the industry average, implying that there has been a relatively successful effort in the management of debt levels. Still, its quick ratio of 0.50 is very weak and demonstrates a lack of ability to pay short-term obligations. Investors have so far failed to pay attention to McGraw-Hill's earnings improvements, as its stock price has fallen by 35.6% in the last 12 months. While it is now cheaper (in proportion to its earnings over the past year) than most other stocks in its industry, we do not feel the stock is a good buy right now because of other concerns. McGraw-Hill had been rated a buy since December 2005. Marriott International ( MAR) operates and franchises hotels and related lodging facilities worldwide. It has been downgraded to hold from buy. The company's third-quarter revenue rose 12.5% compared with the same period last year, exceeding the industry average of 0.7%. Marriott's return on equity improved to 44.82% in the quarter compared with 27.17% in the same period last year. This is a sign of significant strength within the organization. However, the company has reported somewhat volatile earnings recently, and third-quarter EPS remained at 33 cents a share, unchanged from the same period last year. TheStreet.com Ratings feels it is poised for earnings growth in the coming year. As a counter to these strengths, the company's weaknesses include generally poor debt management, poor profit margins and weak operating cash flow. Marriott's stock price has fallen by 28.38% in the past 12 months, and the hold rating indicates that we do not recommend additional investment at this time. Marriott had been rated a buy since December 2005.
Telecom Argentina S.A. ( TEO), through its subsidiaries, provides telecommunications services in Argentina. It has been downgraded to a hold from a buy. The company's third-quarter net income rose 237.1% to $70.04 million from $20.78 million in the same period last year. While its revenue rose by 17.1% over the same time frame, this trailed the industry average of 30.8%. Telecom Argentina's return on equity greatly increased in the third quarter compared with the same period last year, a sign of significant strength within the corporation. Even though its debt-to-equity ratio is 1.38, it is still below the industry average, suggesting that this level of debt is acceptable within the diversified telecommunications services industry. Although its debt-to-equity ratio is mixed, the company's quick ratio of 0.68 is low and demonstrates weak liquidity. Telecom Argentina had been rated a buy since November 2007. Smithfield Foods ( SFD), together with its subsidiaries, produces and processes pork and beef. It has been downgraded to a hold from a buy. The company's revenue rose by 23.5% in the second quarter of 2008 compared with the same period last year, although the growth does not appear to have trickled down to the company's bottom line. Earnings fell to 14 cents per share from 41 cents a share in the second quarter of 2007. Even though the company has had weak EPS results, its stock has gone up by 12.7% in the last 12 months. Despite the rise over the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock. Smithfield Foods' other weaknesses include disappointing return on equity and poor profit margins. It had been rated a buy since December 2005.