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 August 1.

Upgraded to buy from hold was Foundry Networks ( FDRY). The Santa Clara, Calif.-based company is a manufacturer of wired and wireless routing solutions. This rating change is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses and should give investors a better performance opportunity than most stocks we cover.

The revenue growth came in higher than the industry average of 10.1%. Since the same quarter one year prior, revenue rose by 12.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.

Foundry Networks has improved earnings per share by 20% in the most-recent quarter compared year over year. The company has demonstrated a pattern of positive earnings per share growth over the past two years and we feel that this trend should continue. During the past fiscal year, FDRY has increased its bottom line by earning 52 cents versus 25 cents in the prior year. This year, the market expects an improvement in earnings (68 cents versus 52 cents).

The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 17.2% when compared with the same quarter one year prior, going from $15.3 million to $18.3 million.

The gross profit margin for Foundry is rather high; currently it is at 64.6%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 11.4% trails the industry average.

Compared with where it was trading a year ago, FDRY's share price has not changed very much due to the relatively weak year over year performance of the overall market, the company's stagnant earnings and other mixed results. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it is one of the factors that makes this stock an attractive investment. FDRY had been rated a hold as of April 17, 2008.

Seeing a rating change on Friday was Lazard ( LAZ); it was upgraded to buy from hold. Based out of Hamilton, Bermuda LAZ operates as a financial advisory and asset management firm. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses and should give investors a better performance opportunity than most stocks we cover.

Compared with other companies in the Capital Markets industry and the overall market, Lazard's return on equity, or ROE, significantly exceeds that of both the industry average and the S&P 500.

The revenue growth greatly exceeded the industry average of 48.9%. Since the same quarter one year prior, revenue rose by 12.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.

The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 17.1% when compared with the same quarter year over year, going from $29.3 million to $34.3 million.

The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.

LAZ's earnings per share improvement from the most-recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, Lazard increased its bottom line by earning $2.76 vs. $2.22 in the prior year. For the next year, the market is expecting a contraction of 27.9% in earnings ($1.99 vs. $2.76). LAZ had been rated a hold as of July 8, 2008.

Getting downgraded to hold from buy was AGL Resources ( ATG). The Atlanta-based firm specializes in the distribution of natural gas, primarily in Florida, Georgia, Maryland, New Jersey, Tennessee and Virginia. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks.

ATG has experienced a steep decline in earnings per share in the most-recent quarter in comparison with its performance from the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, AGL Resources increased its bottom line by earning $2.73 vs. $2.72 in the prior year. This year, the market expects an improvement in earnings ($2.79 vs. $2.73).

ATG, with its decline in revenue, underperformed when compared with the industry average of 15.6%. Since the same quarter one year prior, revenue has slightly dropped by 4.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

The share price of ATG is down 8.33% when compared with where it was trading one year earlier. This reflects both the trend in the overall market as well as the sharp decline in the company's earnings per share. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

The gross profit margin for AGL Resources is currently extremely low, coming in at 9.9%. It has decreased significantly from the same period last year, along with this, the net profit margin of -2.5% is significantly below that of the industry average.

Net operating cash flow has significantly decreased to -$153 million or 188.67% when compared year over year. In addition, when comparing it with the industry average, the firm's growth rate is much lower. ATG had been rated a buy as of July 31, 2006.

Downgraded to hold from buy was Chesapeake Energy ( CHK). The Oklahoma City-based company engages in the exploration and development of properties for the production of crude oil and natural gas from underground reservoirs. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks.

Compared with its closing price of one year ago, CHK's share price has jumped by 47.32%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.

The gross profit margin for Chesapeake Energy is currently very high, coming in at 410.6%. It has increased significantly year over year. Along with this, the net profit margin of 351% significantly outperformed against the industry average.

CHK, with its very weak revenue results, has greatly underperformed against the industry average of 30.6%. Since the same quarter one year prior, revenue plummeted by 121.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

The debt-to-equity ratio of 1.27 is relatively high when compared with the industry average, suggesting a need for better debt level management.

Return on equity has greatly decreased when compared year over year. This is a signal of major weakness within the corporation. Compared with other companies in the Oil, Gas & Consumable Fuels industry and the overall market, Chesapeake's return on equity significantly trails that of both the industry average and the S&P 500. CHK had been rated a buy as of July 31, 2006.

Ingersoll-Rand ( IR) was downgraded to a hold from buy Friday. The Montvale, N.J.-based industrial goods company manufactures industrial and commercial products. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks.

IR reported significant earnings per share improvement in the most-recent quarter compared year over year. The company has demonstrated a pattern of positive earnings per share growth over the past year and we feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, Ingersoll-Rand increased its bottom line by earning $2.47 vs. $2.38 in the prior year. This year, the market expects an improvement in earnings ($3.76 vs. $2.47).

Despite its growing revenue, the company underperformed as compared with the industry average of 16.3%. Since the same quarter one year prior, revenue has slightly increased by 9.5%. Growth in the company's revenue appears to have helped boost the earnings per share.

The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison with the other companies in the Machinery industry and the overall market, IR's return on equity is significantly below that of the industry average and is below that of the S&P 500.

The company, on the basis of change in net income year over year, has significantly underperformed compared with the Machinery industry average, but is greater than that of the S&P 500. The net income has decreased by 16.5% when compared with the same quarter one year ago, dropping from $217.5 million to $181.6 million. IR had been rated a buy as of April 7, 2008.

Additional ratings changes from August 1 are listed below.
Ticker Company Name Change New Rating Former Rating
ATG AGL Resources Inc. Downgrade Hold Buy
ATPG ATP Oil & GasCorp. Downgrade Hold Buy
BFIN BankFinancial Corp. Downgrade Sell Hold
CAP CAI International Inc. Initiated Hold
CBD Pao De Acucar Cia Brasil Dis Upgrade Buy Hold
CHK Chesapeake Energy Corp. Downgrade Hold Buy
ETR.PA Entergy Corp. Downgrade Hold Buy
FDRY Foundry Networks Inc. Upgrade Buy Hold
FEIC FEI Co. Upgrade Buy Hold
HNR Harvest Natural Resources Upgrade Hold Sell
IR Ingersoll-Rand Co. Ltd. Downgrade Hold Buy
ITRI Itron Inc. Upgrade Buy Hold
JJSF J & J Snack Foods Corp. Upgrade Buy Hold
LAZ Lazard Ltd. Upgrade Buy Hold
LFG LandAmerica Financial Downgrade Sell Hold
MPET Magellan Petroleum Corp. Upgrade Hold Sell
NAV Navistar International Corp. Downgrade Hold Buy
PPO Polypore International Inc. Initiated Sell
This article was written by a staff member of TheStreet.com Ratings.

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