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 Wednesday, Sept. 10.

Target ( TGT) has been upgraded to buy from hold. Target operates large-format general merchandise and food discount stores under the brand names Target and SuperTarget in the U.S.

The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations, growth in earnings per share and relatively strong performance when compared with the S&P 500 during the past year. We feel these strengths outweigh the company's generally poor debt management on most measures that we evaluated.

Despite its growing revenue, the company underperformed as compared with the industry average of 6.8%. Since the same quarter one year prior, revenue has slightly increased by 5.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.

The return on equity has improved slightly when compared with the same quarter one year prior. This can be construed as a modest strength in the organization. Compared with other companies in the multiline retail industry and the overall market, Target's return on equity exceeds both the industry average and that of the S&P 500.

Net operating cash flow has increased to $1,014 million or 36.84% when compared with the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 11.01%.

Target'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 two years. We feel that this trend should continue. During the past fiscal year, TGT has increased its bottom line by earning $3.34 vs. $3.21 in the prior year. This year, the market expects an improvement in earnings ($3.43 vs. $3.34).

The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and the multiline retail industry average. The net income has decreased by 7.4% when compared with the same quarter one year ago, dropping from $686 million to $635 million.

TGT had been rated a hold since July 16, 2008.

Diana Shipping ( DSX) has been downgraded to hold from buy. Diana Shipping, through its subsidiaries, provides shipping transportation services. The company focuses on the transportation of dry bulk cargoes, such as iron ore, coal, grain and other materials along worldwide shipping routes.

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 and notable return on equity. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

DSX's very impressive revenue growth greatly exceeded the industry average of 41.2%. Since the same quarter one year prior, revenue leaped by 97.2%. Growth in the company's revenue appears to have helped boost the earnings per share.

DSX's debt-to-equity ratio is very low at 0.24 and is currently below the industry average, implying that there has been very successful management of debt levels.

Net operating cash flow has significantly increased by 111.41% to $68.96 million when compared with the same quarter last year. Despite an increase in cash flow of 111.41%, DSX is still growing at a significantly lower rate than the industry average of 324.73%.

The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared with the marine industry average, but is greater than that of the S&P 500. The net income increased by 118.1% when compared with the same quarter one year prior, rising from $26.02 million to $56.73 million.

DSX is off 20.51% from its price level of one year ago, reflecting the general market trend and ignoring their higher earnings per share compared to the year-earlier quarter. 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.

DSX had been rated a buy since March 19, 2008.

Rosetta Resources ( ROSE) has been downgraded to hold from buy. Rosetta Resources engages in the acquisition, exploration, development, and production of oil and gas properties in North America.

The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and impressive record of earnings-per-share growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

ROSE's very impressive revenue growth greatly exceeded the industry average of 30.5%. Since the same quarter one year prior, revenue leaped by 77.8%. Growth in the company's revenue appears to have helped boost the earnings per share.

Looking at where the stock is today compared with one year ago, we find that it is not only higher, it has also 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, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down on the basis of the push and pull of the broad market.

ROSE's debt-to-equity ratio is very low at 0.29 and is currently below the industry average, implying that there has been very successful management of debt levels. Although ROSE's debt-to-equity ratio is low, the quick ratio, which is currently 0.62, displays a potential problem in covering short-term cash needs.

Current return on equity exceeded its return on equity from the same quarter one year prior. This is a clear sign of strength within the company. In comparison with the other companies in the oil, gas and consumable fuels industry and the overall market, ROSE's return on equity is significantly below the industry average and is below that of the S&P 500.

ROSE had been rated a buy since Aug. 14, 2008.

Shaw Group ( SGR) has been downgraded to hold from buy. The Shaw Group offers engineering, technology, construction, fabrication, environmental and industrial services to various companies worldwide. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures.

However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and weak operating cash flow.

The revenue growth significantly trails the industry average of 56.4%. Since the same quarter one year prior, revenue rose by 13.6%. 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.

SGR's debt-to-equity ratio of 0.85 is somewhat low overall, but it is high when compared with the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.90 is weak.

Looking at the price performance of SGR's shares over the past 12 months, there is not much good news to report: the stock is down 30.51%, and it has underperformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared with its current earnings) than most other companies in its industry.

The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared with the construction & engineering industry average, but is greater than that of the S&P 500. The net income has decreased by 0.4% when compared with the same quarter one year ago, dropping from $54.14 million to $53.91 million.

SGR had been rated a buy since Oct. 12, 2007.

OYO Geospace ( OYOG) has been downgraded to hold from buy. OYO Geospace engages in the design and manufacture of instruments and equipment used in the acquisition and processing of seismic data, as well as in the characterization and monitoring of producing oil and gas reservoirs.

The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, weak operating cash flow and disappointing return on equity.

The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the energy equipment and services industry average. The net income increased by 17.5% when compared with the same quarter one year prior, going from $3.69 million to $4.33 million.

OYOG's revenue growth trails the industry average of 30.2%. Since the same quarter one year prior, revenue rose by 16.6%. Growth in the company's revenue appears to have helped boost the earnings per share.

42.80% is the gross profit margin for OYOG 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 12.20% trails the industry average.

OYOG's stock share price has done very poorly compared with where it was a year ago. Despite any rallies, the net result is that it is down by 47.92%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, OYOG is still more expensive than most of the other companies in its industry.

Net operating cash flow has significantly decreased to -$1.06 million or 127.62% when compared with the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

OYOG had been rated a buy since Sept. 8, 2006.

Additional ratings changes from Sep. 10 are listed below.
Ticker Company Name Change New Rating Former Rating
ARHN Archon Corp Upgrade Hold Sell
CHQ Challenger Energy Corp Downgrade Sell Hold
DSX Diana Shipping Inc Downgrade Hold Buy
EVK Ever-Glory International Group Downgrade Sell Hold
OYOG OYO Geospace Corp Downgrade Hold Buy
PINN Pinnacle Gas Resources Initiated Sell
ROSE Rosetta Resources Downgrade Hold Buy
SGR Shaw Group Downgrade Hold Buy
TGT Target Upgrade Buy Hold
This article was written by a staff member of TheStreet.com Ratings.