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 Aug. 13.

We upgraded Gartner ( IT - Get Report) to buy from hold. The Stamford, Conn.-based company is a provider of research and analysis on information technology and related technology industries. This is driven by multiple 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.

Gartner's revenue growth has slightly outpaced the industry average of 9.7%. Since the same quarter one year prior, revenues rose by 17.4%. Growth in the company's revenue appears to have helped boost the earnings per share.

Looking at where the stock is today compared year over year, we find that it not only is higher but also has clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. 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.

Gartner reported significant earnings-per-share improvement in the most-recent quarter compared with the same quarter a year ago. The company has demonstrated a pattern of positive earnings-per-share growth over the past two years. We feel that this trend should continue. During the past fiscal year, Gartner increased its bottom line by earning 68 cents vs. 51 cents in the prior year. This year, the market expects an improvement in earnings (99 cents vs. 68 cents).

The net income growth year over year has significantly exceeded that of the S&P 500 and the IT services industry. The net income increased by 112.8% compared with the same quarter one year prior, rising from $14.05 million to $29.90 million.

The gross profit margin for Gartner is rather high; currently, it is at 55.80%. It has increased from the same quarter the previous year.

Gartner had been rated a hold as of Dec. 17, 2007.

Stantec ( STN - Get Report) was upgraded to buy from hold. Situated in Canada, the company specializes in providing architectural and engineering design solutions. This is driven by multiple 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 greatly exceeded the industry average of 0.0%. Since the same quarter one year prior, revenues rose by 40.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.

The current debt-to-equity ratio, 0.52, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.20, which illustrates its ability to avoid short-term cash problems.

Stantec has improved earnings per share by 26.3% in the most-recent quarter compared year over year. The company has demonstrated a pattern of positive EPS growth over the past two years. During the past fiscal year, Stantec increased its bottom line by earning $1.50, vs. $1.31 in the prior year.

The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the commercial services and supplies industry. The net income increased by 26.8% compared with the same quarter one year prior, rising from $17.43 million to $22.11 million.

Stantec had been rated a hold as of July 22, 2008.

Shares of Cinemark ( CNK - Get Report) were upgraded to hold from sell. This Plano, Texas-based firm specializes in the operation of movie theaters in North and South America. 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.

Cinemark's revenue growth has slightly outpaced the industry average of 4.5%. Since the same quarter one year prior, revenues slightly increased by 6.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.

The share price of Cinemark is down 10.55% compared with where it was trading one year earlier. This reflects both the trend in the overall market and the sharp decline in the company's earnings per share.

The gross profit margin for Cinemark is rather low; currently, it is at 18.8%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.3% significantly trails the industry average.

Net operating cash flow has significantly decreased to $24.69 million, or 84.68%, compared with the same quarter last year. In addition, the firm's growth rate is much lower than the industry average.

Cinemark had been rated a sell as of May 28, 2008.

Applied Materials ( AMAT - Get Report) was downgraded to hold from buy. The manufacture of semiconductor fabrication equipment is based out of Santa Clara, Calif. 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.

Applied Materials' debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.36, which illustrates the ability to avoid short-term cash problems.

The gross profit margin for Applied Materials is 44.8%, which we consider to be strong. Regardless of its high profit margin, the company has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 8.9% trails the industry average.

The revenue fell significantly faster than the industry average of 11.2%. Since the same quarter one year prior, revenues fell by 27.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

Net operating cash flow has decreased to $320.42 million, or 49.74%, when compared year over year. In addition, the firm's growth rate is much lower than the industry average.

The company, on the basis of change in net income year over year, has significantly underperformed when compared with that of the S&P 500 and the semiconductors and semiconductor equipment industry. The net income has significantly decreased by 65.2% when compared with the same quarter one year ago, falling from $473.52 million to $164.77 million.

Applied Materials has been rated a buy since October 9, 2006.

Next, Westar Energy ( WR) was downgraded to hold from buy. The utilities firm is a provider of electricity in Kansas. 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.

Westar Energy's revenue growth has slightly outpaced the industry average of 5.1%. Since the same quarter one year prior, revenues slightly increased by 8.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.

The gross profit margin for Westar Energy is rather low; currently, it is at 18.80%. It has decreased from the same quarter year over year. Along with this, the net profit margin of 1.30% trails that of the industry average.

Net operating cash flow has significantly decreased to -$12.85 million, or 669.80%, when compared with the same quarter last year. In addition, the firm's growth rate is much lower than the industry average.

Westar had been rated a buy since May 13, 2008.

Additional ratings changes from Aug. 13 are listed below.
Ticker Company Name Change New Rating Former Rating
AEC Associated Estates Realty Corp. Upgrade Hold Sell
AMAT Applied Materials Inc. Downgrade Hold Buy
BDMS Birner Dental Management Downgrade Hold Buy
CBKM Consumers Bancorp. Inc. Downgrade Sell Hold
CLDA Clinical Data Inc. Downgrade Sell Hold
CNK Cinemark Holdings Inc. Upgrade Hold Sell
CRED Credo Petroleum Corp. Downgrade Hold Buy
CRY CryoLife Inc. Upgrade Buy Hold
FIZZ National Beverage Corp. Upgrade Buy Hold
IT Gartner Inc. Upgrade Buy Hold
JOBS 51job Inc. Downgrade Hold Buy
SIGI Selective Insurance Group Upgrade Buy Hold
SRCE 1st Source Corp. Upgrade Buy Hold
STN Stantec Inc. Upgrade Buy Hold
WR Westar Energy Inc. Downgrade Hold Buy

This article was written by a staff member of TheStreet.com Ratings.