The following ratings changes were generated on Monday, Jan. 12.

We've downgraded Braksem ( BAK), an integrated petrochemical cracker and thermoplastics producer in Brazil and Europe, from hold to sell, driven by its deteriorating net income, generally weak debt management, disappointing return on equity, weak operating cash flow and poor profit margins.

Net income decreased from $83.3 million in the year-ago quarter to -$491.2 million. The debt-to-equity ratio of 1.7 is quite high overall and compared with the industry average, and the 0.8 quick ratio is poor, illustrating an inability to avoid short-term cash problems. Return on equity has greatly decreased since the year-ago quarter, underperforming both the industry and the S&P 500. Net operating cash flow fell 21.2% to $186 million, and Braksem's gross profit margin of 19.4% is rather low, though it did increase from the same period last year. The company's net profit margin of -28.2% significantly underper4formed the industry average.

We've downgraded financial holding company BOK Financial ( BOKF) from buy to hold. Strengths include its expanding profit margins and good cash flow from operations. However, we also find weaknesses including a decline in the stock price during the past year, disappointing return on equity and feeble growth in the company's earnings per share.

BOK's gross profit margin of 61.7% is rather high, having increased since the same quarter last year, and it's net profit margin of 14.3% outperforms the industry average. Net operating cash flow rose 32.8% to $137.8 million since the year-ago quarter, though BOK is still growing at a significantly lower rate than the industry average of 117.5%. Revenue dropped 3.4%, underperforming the industry average of 8.3%, and return on equity decreased slightly, implying a minor weakness in the organization.

Shares are down 26.1% on the year, but don't assume that the stock can now be tagged as cheap and attractive. Based on its current price in relation to its earnings, BOK is still more expensive than most of the other companies in its industry.

We've downgraded Ecolab ( ECL), which develops and markets products and services for the hospitality, foodservice, health care and light industrial markets, 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, we also find weaknesses including a decline in the stock price during the past year, weak operating cash flow and disappointing return on equity.

Revenue rose by 15.1% since the same quarter last year, trailing the industry average of 26.2% growth. Ecolab's 0.5 debt-to-equity ratio is low and below the industry average, implying successful management of debt levels, but its quick ratio of 0.9 is somewhat weak and could be cause for future problems. Net operating cash flow has decreased by 21.5% to $185.5 million or 21.53% compared with the year-ago quarter.

Earnings per share rose by 8.7% in the most recent quarter compared with the year-ago quarter. The company has demonstrated a pattern of positive EPS growth over the past two years, which we feel should continue, suggesting improvement in business performance. During the past fiscal year, Ecolab increased its bottom line by earning $1.70 vs. $1.43 in the prior year, and this year, the market expects furthetr improvement in earnings to $1.86.

Shares are down 33.3% on the year, but don't assume that the stock can now be tagged as cheap and attractive. Based on its current price in relation to its earnings, Ecolab is still more expensive than most of the other companies in its industry.

We've upgraded HCC Insurance Holdings ( HCC) from hold to buy, driven by its largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

HCC's debt-to-equity ratio is very low at 0.2 and is currently below that of the industry average, implying very successful management of debt levels. Revenue fell by 2.8% since the year-ago quarter but outperformed the industry average. Net income decreased by 39.7% to $59.1 million. Return on equity also decreased, but on the basis of ROE, HCC outperforms both the industry and the S&P 500.

EPS declined by 39.3% in the most recent quarter compared with the year-ago quarter. This company has reported somewhat volatile earnings recently, and we feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, HCC increased its bottom line by earning $3.38 vs. $2.92 in the prior year, and for the next year, the market is expecting a contraction of 16.7% in earnings to $2.82.

We've upgraded NuStar Energy ( NS), which engages in the transportation, terminalling, and storage of crude oil and refined products, from hold to buy, driven by its robust revenue growth, compelling growth in net income, good cash flow from operations, notable return on equity and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows low profit margins.

Revenue leaped by a very impressive 359.7% since the year-ago quarter, greatly exceeding the industry average of 29% growth. Net income increased by 195.4% to $151.3 million. Outperforming the industry and the S&P 500. Net operating cash flow increased by 415.4% to $203.1 million, and return on equity improved slightly.

NuStar reported significant earnings per share improvement in the most recent quarter compared with the same quarter a year ago. This company has reported somewhat volatile earnings recently, but we feel it is poised for EPS growth in the coming year. During the past fiscal year, it reported lower earnings of $2.75 vs. $2.84 in the prior year, but this year, the market expects an improvement in earnings to $4.07.

Other ratings changes include Jos. A Bank Clothiers ( JOSB), upgraded from hold to buy, and Foster ( FSTR), also upgraded from hold to buy.

All ratings changes generated on Jan. 12 are listed below.


Ticker
Company
Current
Change
Previous
BAK
Braskem
SELL
Downgrade
HOLD
BOKF
BOK Financial
HOLD
Downgrade
BUY
CDGD
Cambridge Holdings
SELL
Downgrade
HOLD
ECL
Ecolab
HOLD
Downgrade
BUY
FSTR
Foster
BUY
Upgrade
HOLD
GBX
Greenbrier
SELL
Downgrade
HOLD
HCC
HCC Insurance
BUY
Upgrade
HOLD
HEI.A
HEICO
BUY
Upgrade
HOLD
JOSB
Jos. A Bank Clothiers
BUY
Upgrade
HOLD
NS
NuStar Energy
BUY
Upgrade
HOLD
SCMF
Southern Community Financial
HOLD
Upgrade
SELL
VCST
ViewCast.com
HOLD
Upgrade
SELL

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.

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