The following ratings changes were generated on Tuesday, Nov. 4.

We've downgraded Alexander's ( ALX), a real estate investment trust, from buy to hold. Strengths include its revenue growth, notable return on equity and relatively strong performance when compared with the S&P 500 during the past year. Weaknesses include unimpressive growth in net income, generally poor debt management and weak operating cash flow.

Revenue increased by 1% over the same quarter a year ago, but earnings per share declined. Return on equity greatly increased, a signal of significant strength, and greatly exceeds the average ROE of the REITs industry and of the S&P 500.

EPS have declined steeply in the most recent quarter compared with the same quarter last year. The company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, Alexander's turned its bottom line around by earning $22.45 vs. -$14.99 in the prior year. Net income decreased by 209.8% over the same quarter a year ago, to -$31.44 million, underperforming both the S&P 500 and the REITs industry. The debt-to-equity ratio is very high at 9.55 and currently higher than the industry average, implying that there is very poor management of debt levels within the company.

We've downgraded Coca-Cola Femsa ( KOF), which operates as a bottler of Coca-Cola trademark beverages in Latin America, from buy to hold. Strengths include its revenue growth, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. Weaknesses include unimpressive growth in net income, disappointing return on equity and a decline in the stock price during the past year.

Revenue increased 5.4% over the same quarter a year ago, underperforming the industry average of 8.8%. The current debt-to-equity ratio, 0.30, is low and is below the industry average, implying successful management of debt levels, but the quick ratio of 0.46 is very weak and demonstrates a lack of ability to pay short-term obligations.

Net income decreased by 44.1% to $98.37 million from $176.1 million in the same quarter a year ago, underperforming the S&P 500 and the beverages industry. Shares are down 24.8% over the past year. We believe this reflects several factors, including the market's overall decline (which was actually deeper) and 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.

We've downgraded Mercury General ( MCY), which engages in writing private passenger and commercial automobile insurance in the U.S., from buy to hold.

The company reported a net loss of $140.54 million, or $2.57 per share, in the third quarter due to net realized investment losses. This compares with a net profit of $63.28 million, or $1.15 per share, during the same quarter a year ago. Excluding net realized investment losses of $180.03 million, or $3.29 per share, operating income was $39.49 million, or 72 cents per share, which missed the most recent consensus estimate of 90 cents per share. Net premiums written declined 8.4% year over year, to $695.14 million from $758.85 million, due to lower premiums written in California and non-California operations. Net premiums earned fell 7% to $696.61 million, hurt by lower net premiums written. Net investment income slipped 2.9% to $38.09 million due to a reduced investment portfolio. The after-tax yield on investment income remained flat at 3.9%. However, net realized investment losses stood at $180.03 million compared to a gain of $1.33 million a year ago. California net premiums written reduced 7.4% year over year to $544.32 million, and California net premiums earned dropped 5.8% to $546.18 million. Non-California net premiums written plunged 11.9% to $150.83 million, and net premiums earned sank 11.0% to $150.42 million.

Paid losses and loss adjustment expenses during the third quarter edged down 1.8% year over year to $483.14 million. Mercury raised its quarterly dividend by 11.5% to 58 cents per share, payable on Dec. 30, 2008. The company's loss ratio was 73.5% compared with 66.50%, and the expense ratio increased to 28.50% from 27.70% in the year-ago quarter. Consequently, the combined ratio for the quarter increased to 102% from 94.20%.

We've downgraded Netflix ( NFLX) from buy to hold. Strengths include its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we find that the stock has had a decline in price during the past year.

Earnings per share improved by 43.5% 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, and we feel that this trend should continue, suggesting that the performance of the business is improving. During the past fiscal year, Netflix increased its bottom line by earning 97 cents vs. 71 cents in the prior year. This year, the market expects an improvement in earnings to $1.28. The net income growth of 30.2% from the same quarter one year ago has greatly exceeded that of the S&P 500 but is less than that of the internet and catalog retail industry average. Net operating cash flow has slightly increased to $73.23 million, or 3.75% when compared with the same quarter last year, but Netflix is still growing at a significantly lower rate than the industry average of 72.27%.

Netflix's gross profit margin is rather high at 50.7%, but it has managed to decrease from the same period last year. The net profit margin of 6%, however, compares favorably to the industry average. Shares are down 11.05%, reflecting, in part, the market's overall decline. 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.

We've downgraded Varian Medical Systems ( VAR), which provides cancer therapy systems worldwide, from buy to hold. Strengths include its growth in earnings per share, 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 net income has been quite unimpressive.

Varian has improved earnings per share by 11.5% in the most recent quarter compared with the same quarter a year ago. The company has demonstrated a pattern of positive EPS growth over the past two years, and we feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, Varian increased its bottom line by earning $2.25 vs. $1.83 in the prior year. This year, the market expects an improvement in earnings to $2.60. Despite its growing revenue, the company underperformed the industry average of 18.3%. Since the same quarter one year prior, revenues rose by 13.4%. The gross profit margin of 44.30% is strong and has increased from the same quarter the previous year. However, net profit margin of 13.20% trails the industry average.

The company's current return on equity has slightly decreased from the same quarter one year prior, implying a minor weakness in the organization. Varian's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500. The net income has decreased by 0.2% when compared to the same quarter one year ago, dropping from $78.63 million to $78.50 million. On the basis of net income, Varian underperformed the health care equipment and supplies industry but outperformed the S&P 500.

Other ratings changes include FreightCar America ( RAIL) and First American ( FAF), both downgraded from hold to sell.

All ratings changes generated on Nov. 4 are listed below.
ABG Asbury Automotive Group
SELL
Downgrade
HOLD
AIN Albany International
SELL
Downgrade
HOLD
ALX Alexander's
HOLD
Downgrade
BUY
ANDE Andersons
HOLD
Downgrade
BUY
APAB Appalachian Bancshares
SELL
Downgrade
HOLD
BCE BCE
HOLD
Downgrade
BUY
BITI Bio-Imaging Technologies
HOLD
Downgrade
BUY
CHLN China Housing & Land
SELL
Downgrade
HOLD
CITZ CFS Bancorp
SELL
Downgrade
HOLD
COOP Cooperative Bankshares
SELL
Downgrade
HOLD
CUTR Cutera
SELL
Downgrade
HOLD
CXW Corrections
HOLD
Downgrade
BUY
EPHC Epoch Holding
HOLD
Downgrade
BUY
FAF First American
SELL
Downgrade
HOLD
FSR Flagstone
SELL
Downgrade
HOLD
GLBZ Glen Burnie
SELL
Downgrade
HOLD
GSIT GSI Technology
SELL
Downgrade
HOLD
HGIC Harleysville
HOLD
Downgrade
BUY
ITEX Itex
HOLD
Upgrade
SELL
KEI Keithley
SELL
Downgrade
HOLD
KOF Coca-Cola Femsa
HOLD
Downgrade
BUY
LOOK Looksmart
SELL
Downgrade
HOLD
LOOP Loopnet
SELL
Downgrade
HOLD
MCY Mercury General
HOLD
Downgrade
BUY
MIGP Mercer Insurance
HOLD
Downgrade
BUY
MMUS MakeMusic
SELL
Downgrade
HOLD
MWE Markwest Energy
SELL
Downgrade
HOLD
MXGL Max Capital
SELL
Downgrade
HOLD
NFLX Netflix
HOLD
Downgrade
BUY
NSHA Nashua
SELL
Downgrade
HOLD
NTY NBTY
HOLD
Downgrade
BUY
OFI Overhill Farms
HOLD
Downgrade
BUY
PWVI PowerVerde
FROZEN
HOLD
RAIL FreightCar America
SELL
Downgrade
HOLD
RJF Raymond James
HOLD
Downgrade
BUY
SAFT Safety Insurance
HOLD
Downgrade
BUY
SGB Southwest Georgia Financial
SELL
Downgrade
HOLD
STZ.B Constellation Bran ds
SELL
Downgrade
HOLD
TKLC Tekelec
HOLD
Downgrade
BUY
TLEO Taleo
SELL
Downgrade
HOLD
VAR Varian Medical
HOLD
Downgrade
BUY
WGO Winnebago Industries
SELL
Downgrade
HOLD
Source: TheStreet.com Ratings

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

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