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 26.

Mariner Energy ( ME) was upgraded from sell to buy. Mariner Energy, operates as an independent oil and gas exploration, development and production company. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and attractive valuation levels. We feel these strengths outweigh the fact that the company has had generally poor debt management on most measures that we evaluated.

ME's very impressive revenue growth greatly exceeded the industry average of 29.4%. Since the same quarter one year prior, revenue leaped by 101.5%. Growth in the company's revenue appears to have helped boost the earnings per share.

Powered by its strong earnings growth of 265.78% and other important driving factors, this stock has surged by 37.01% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ME should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.

ME 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, ME increased its bottom line by earning $1.67 vs. $1.50 in the prior year. This year, the market expects an improvement in earnings ($4.68 vs. $1.67).

The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the oil, gas & consumable fuels industry. The net income increased by 274.4% when compared with the same quarter one year prior, rising from $32.96 million to $123.39 million.

ME had been rated a sell since April 4, 2007.

McMoRan Exploration ( MMR) has been upgraded from hold to buy. McMoRan Exploration engages in the exploration, development, production and marketing of crude oil and natural gas offshore in the Gulf of Mexico and onshore in the Gulf Coast area. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, compelling growth in net income, good cash flow from operations and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had generally poor debt management on most measures that we evaluated.

MMR's very impressive revenue growth greatly exceeded the industry average of 29.4%. Since the same quarter one year prior, revenue leaped by 728.0%. Growth in the company's revenue appears to have helped boost the earnings per share.

Powered by its strong earnings growth of 500.00% and other important driving factors, this stock has surged by 111.11% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, MMR should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.

The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the oil, gas & consumable fuels industry. The net income increased by 1311.3% when compared with the same quarter one year prior, rising from -$5.34 million to $64.67 million.

Net operating cash flow has significantly increased by 594.34% to $209.41 million when compared with the same quarter last year. In addition, MMR has also vastly surpassed the industry average cash flow growth rate of 20.14%.

In comparison with the other companies in the oil, gas & consumable fuels industry and the overall market, MMR return on equity is significantly below that of the industry average and is below that of the S&P 500.

MMR had been rated a hold since February 19, 2008.

Sapient ( SAPE) Sapient provides business, marketing and technology consulting services worldwide. The company offers its services in the areas of business and information technology (IT) strategy, business applications, business intelligence and outsourcing. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company shows low profit margins.

The revenue growth came in higher than the industry average of 9.8%. Since the same quarter one year prior, revenue rose by 27.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.

SAPE has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, SAPE has a quick ratio of 1.98, which demonstrates the ability of the company to cover short-term liquidity needs.

Powered by its strong earnings growth of 800.00% and other important driving factors, this stock has surged by 33.22% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.

SAPE 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 year. We feel that this trend should continue. During the past fiscal year, SAPE turned its bottom line around by earning 12 cents vs. -1 cents in the prior year. This year, the market expects an improvement in earnings (38 cents vs. 12 cents).

The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the IT services industry. The net income increased by 1266.5% when compared with the same quarter one year prior, rising from $0.85 million to $11.57 million.

SAPE had been rated a hold since August 25, 2006.

Cato ( CTR) has been downgraded from buy to hold. The Cato operates as a fashion specialty retailer for fashion and value conscious females in the southeastern U.S. The company's strengths can be seen in multiple areas, such as its revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and feeble growth in the company's earnings per share.

The revenue growth came in higher than the industry average of 10.6%. Since the same quarter one year prior, revenue has slightly increased by 5.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.

36.70% is the gross profit margin for CTR which we consider to be strong. 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 5.20% trails the industry average.

The change in net income from the same quarter one year ago has significantly exceeded that of the S&P 500 and the specialty retail industry. The net income has decreased by 3.4% when compared with the same quarter one year ago, dropping from $12.51 million to $12.09 million.

CTR has underperformed the S&P 500 Index, declining 22.57% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

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 Specialty Retail industry and the overall market, CTR return on equity is significantly below that of the industry average and is below that of the S&P 500.

CTR had been rated a buy since July 15, 2008.

Validus Holdings ( VR) has been initiated at hold. Validus Holdings, through its subsidiaries, offers reinsurance and insurance coverage in the property, marine and specialty lines markets. The company's strengths can be seen in multiple areas, such as its notable return on equity, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good.

In comparison with the other companies in the insurance industry and the overall market, VR's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.

VR's very impressive revenue growth greatly exceeded the industry average of 10.1%. Since the same quarter one year prior, revenue leaped by 106.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.

VR's debt-to-equity ratio is very low at 0.15 and is currently below that of the industry average, implying that there has been very successful management of debt levels.

40.90% is the gross profit margin for VR which we consider to be strong. Despite thehigh profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, VR's net profit margin of 25.20% significantly outperformed against the industry.

VR's earnings per share improvement from the most-recent quarter was slightly positive.

Additional ratings changes from August 26 are listed below.
Ticker Company Name Change New Rating Former Rating
ATB Arlington Tankers Ltd. Downgrade Hold Buy
CFI Culp Inc. Upgrade Buy Hold
CTR Cato Corp Downgrade Hold Buy
ECPG Encore Capital Group Inc. Upgrade Buy Hold
FBN Furniture Brands International Inc. Downgrade Sell Hold
GMET Geomet Inc. Upgrade Hold Sell
LAWS Lawson Products Downgrade Sell Hold
ME Mariner Energy Inc. Upgrade Buy Sell
MMR McMoran Exploration Co. Upgrade Buy Hold
MOC Command Security Corp Upgrade Buy Hold
NOG Northern Oil & Gas Inc. Initiated Hold
NSYS Nortech Systems Inc. Downgrade Hold Buy
PNTR Pointer Telcoation Ltd Upgrade Hold Sell
POL Polyone Corp Upgrade Buy Hold
PTC Par Technology Corp Upgrade Hold Sell
REXX Rex Energy Corp Initiated Sell
RSYS Radisys Corp Upgrade Hold Sell
SAPE Sapient Corp Upgrade Buy Hold
SOTK Sono-Tek Corp Downgrade Sell Hold
SSRX 3SBio Inc. Initiated Sell
SSYS Stratasys Inc. Downgrade Hold Buy
TWLL Techwell Inc. Downgrade Sell Hold
TYPE Monotype Imaging Holdings Initiated Hold
VR Validus Holdings Ltd Initiated Hold
VTNC Vitran Corp Upgrade Buy Hold
WEL Boots & Coots International Well Control Upgrade Buy Hold

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

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