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 May 28.

Ashland ( ASH), a diversified chemicals company, has been upgraded to buy. For the second quarter, revenue increased 7.1% year over year to $2.06 billion, and earnings per share rose to $1.13 from 49 cents. The company's debt-to-equity ratio is very low at 0.02, implying successful management of debt levels. Its quick ratio of 2.13 demonstrates an ability to cover short-term liquidity needs. Net operating cash flow has significantly increased to $155 million in the past year. With a price-to-earnings ratio of 16.21, the stock trades at a substantial discount to its peers. Ashland had been rated hold since Oct. 31.

Toronto Dominion Bank ( TD), a provider of financial services, has been upgraded to buy. For the second quarter, revenue fell 1% year over year to $6.1 billion, and earnings per share fell to $1.12 from $1.20. The gross profit margin is high at 52%. The net profit margin of 14% also compares favorably with the industry average. Return on equity has slightly decreased from the same quarter one year prior to 13% but exceeds the industry average. Share price has not changed very much over the past year. With a price-to-earnings ratio of 12.66, the stock trades at a slight premium to others in its industry. Toronto Dominion Bank had been rated hold since TheStreet.com initiated coverage on May 26, 2006.

ConMed ( CNMD), a medical technology company, has been upgraded to buy. For the first quarter, revenue increased 12% year over year to $190.8 million, while earnings per share declined to 38 cents from 42 cents. For 2008, the market expects an improvement in earnings to $1.56 from $1.44 in 2007. Net operating cash flow has increased 85% to $20.8 million. Its cash flow growth rate exceeds the industry average. The gross profit margin is rather high at 55%. However, the net profit margin of 5.8% significantly trails the industry average.

Playboy Enterprises ( PLA), a media company, has been downgraded to sell. For the first quarter, revenue declined 8% year over year to $78.5 million, and earnings per share swung to a loss of 9 cents from a profit of 4 cents. Return on equity has slightly decreased from the same quarter one year prior to 0.2%. The gross profit margin is currently lower than what is desirable at 31%. The negative net profit margin of 4% is significantly below that of the industry average. Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 44.06%, worse than the S&P 500's performance. Playboy Enterprises had been rated hold since Nov. 17, 2006.

Enstar ( ESGR), which through its subsidiaries acquires and manages insurance and reinsurance companies in run-off, has been initiated with a sell rating. For the first quarter, revenue declined 76% year over year to $5.6 million, and loss per share widened to $1.97 from 20 cents. The stock's price remains largely unchanged from where it was a year ago. With a price-to-earnings ratio of 51.36, the stock trades at a substantial premium to others in its sector. Please note that our ratings model penalizes newly initiated stocks for lack of data that is otherwise amassed through coverage.

Additional ratings changes from May 28 are listed below.

Ticker Company Name Change New Rating Former Rating
ASH Ashland Upgrade Buy Hold
CNMD ConMed Upgrade Buy Hold
ESGR Enstar Group Initiated Sell
FORTY Formula Systems Upgrade Buy Hold
PLA Playboy Enterprises Downgrade Sell Hold
PLA.A Playboy Enterprises Downgrade Sell Hold
TD Toronto Dominion Bank Upgrade Buy Hold
TOO Teekay Offshore Partners Initiated Sell
UPG Universal Power Upgrade Hold Sell
This article was written by a staff member of TheStreet.com Ratings.