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.

However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company.

For those reasons, we believe a rating alone cannot tell the whole story, and that it should be part of an investor's overall research.

The following ratings changes were generated on April 25.

Allete ( ALE), which generates and transmits electrical power, has been upgraded to buy. For the fourth quarter, revenue rose 7.7% year over year to $212.3 million, while earnings per share fell to 77 cents from 82 cents. Net income has decreased by 1.8% to $22.20 million in the same period. The company's debt-to-equity ratio of 0.57 is low, but its quick ratio of 0.80 is somewhat weak and could be cause for future problems. Return on equity has improved slightly from the year-ago quarter to 11.8%. This can be construed as a modest strength in the organization. Allete had been rated hold since Jan. 31.

Weingarten Realty Investors ( WRI), a developer of shopping centers and other commercial real estate, has been upgraded to buy. For the fourth quarter, net income increased 22% year over year to $66.6 million, and revenue increased 9.8% to $163.4 million. EPS climbed to 40 cents from 26 cents. For 2008, the market expects an improvement in full-year EPS to $1.97 from $1.47 in 2007. At 47%, the company's gross profit margin is strong, and its net profit margin of 41% significantly outperforms the industry average. Weingarten Realty Investors had been rated hold since Jan. 4.

Vina Concha y Toro ( VCO), which produces wine in Chile, has been upgraded to buy. For the fourth quarter, revenue increased 48% year over year to $166.2 million, and earnings per share increased to 48 cents from 22 cents. For 2008, the market expects an improvement in full-year EPS to $2.05 from $1.90 in 2007.

At 40%, the company's gross profit margin is strong, but its net profit margin of 10.40% trails the industry average. The rise in share price over the past year has outpaced that of the S&P 500. This rise in price makes the stock relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels. Vina Concha y Toro had been rated hold since Aug. 24.

Brunswick ( BC), a maker of boats, marine engines, fitness equipment and bowling and billiards equipment, has been upgraded to hold. Strengths such as a solid financial position are weighted down by a disappointing stock-price performance, feeble EPS growth and deteriorating net income. For the first quarter, revenue dropped 2.8% year over year to $1.35 million, and earnings per share fell to 15 cents from 38 cents.

The company's debt-to-equity ratio, 0.38, is low, implying successful management of debt. At 0.69, the quick ratio, however, displays a potential problem in covering short-term cash needs. Gross profit margin is rather low at 23% and has decreased in the past year. Along with this, the net profit margin of 1% trails the industry average.

Net operating cash flow has significantly decreased to negative $74.1 million from the year-ago quarter. Shares have fallen 48% in the past year, netting the stock a price-to-earnings ratio of 24.91, which is still expensive compared with the industry average. Brunswick had been rated sell since Sept. 7.

Celestica ( CLS), a provider of electronic manufacturing services and solutions, has been upgraded to hold. Strengths such as its solid stock-price performance and impressive EPS growth are balanced by poor profit margins. For the first quarter, earnings per share rose to 13 cents from a loss of 15 cents in the year-ago quarter. Net operating cash flow has significantly increased year over year to $47.4 million. Return on equity has greatly increased to 2.3%. This is a signal of significant strength within the corporation.

The company's gross profit margin is extremely low at 7.5%, and its net profit margin of 1.6% trails the industry average. Shares have surged 34% in the past year, netting the stock a price-to-earnings ratio of 39.95, which is significantly higher than other stocks in the sector. Celestica had been rated sell since Feb. 5.

Additional ratings changes from April 25 are listed below.

Ticker Company Name Change New Rating Former Rating
ALE Allete Upgrade Buy Hold
AWBC AmericanWest Bancorp Downgrade Sell Hold
BC Brunswick Upgrade Hold Sell
CLS Celestica Upgrade Hold Sell
GSIC GSI Commerce Downgrade Sell Hold
NAII Natural Alternatives Downgrade Sell Hold
OCFC OceanFirst Financial Upgrade Buy Hold
SMTB Smithtown Bancorp Downgrade Hold Buy
VCO Vina Concha y Toro Upgrade Buy Hold
WRI Weingarten Realty Investors Upgrade Buy Hold
CJBK Central Jersey Bancorp Upgrade Hold Sell
SMA Symmetry Medical Downgrade Hold Buy
FTD FTD Group Upgrade Buy Hold
HWCC Houston Wire & Cable Upgrade Hold Sell
This article was written by a staff member of TheStreet.com Ratings.

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