The following ratings changes were generated on Tuesday, Feb. 17. We've upgraded Amphenol ( APH), which designs, manufactures and markets electrical, electronic and fiber optic connectors, interconnect systems and coaxial and flat-ribbon cable worldwide, from hold to buy. This rating is driven by the company's notable return on equity, good cash flow from operations, growth in earnings per share, largely solid financial position with reasonable debt levels by most measures and relatively strong performance when compared with the S&P 500 during the past year. We feel these strengths outweigh the fact that the company shows low profit margins. Return on equity has improved slightly compared with the year-ago quarter, which can be construed as a modest strength in the organization, significantly outperforming the S&P 500 and the electronic equipment, instruments and components industry. Net operating cash flow has increased 28.4% to $170.8 million, though revenue fell slightly by 2.8%, underperforming the industry average. Earnings per share improved slightly, but while the company has demonstrated a pattern of positive EPS growth over the past two years, we anticipate underperformance relative to this pattern in the coming year. Amphenol has a low debt-to-equity ratio of 0.6, but it is higher than the industry average. The company's 1.2 quick ratio is sturdy. We've downgraded communications solutions provider BT Group ( BT) from hold to sell, driven by its feeble growth in its earnings per share, deteriorating net income, generally weak debt management, poor profit margins and weak operating cash flow. Net income decreased from $875 million in the year-ago quarter to -$112 million in the most recent quarter, significantly underperforming the S&P 500 and the diversified telecommunication services industry. Net operating cash flow decreased by 44.9% to $1,038.8 million. BT Group experienced a steep decline in EPS in the most recent quarter, a continuation of a yearlong pattern of declining EPS, which we anticipate should continue in the coming year. BT's debt-to-equity ratio is very high at 5.4 and currently higher than the industry average, implying very poor management of debt levels. BT also has a quick ratio of 0.6, demonstrating its lack of ability to cover short-term liquidity needs. Bt's gross profit margin of 23.5% is rateher low, having decreased from the year-ago quarter, and its net profit margin of -2.4% is significantly below the industry average.
We've upgraded Goldcorp ( GG), which engages in the acquisition, exploration, development and operation of precious metal properties, from hold to buy. This rating is driven by the company's compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Net income rose from $75.8 million in the year-ago quarter to $297.2 million, or by 292.1%, significantly outperforming the S&P 500 and the metals and mining industry. Revenue increased by 5.4%, and net operating cash flow increased 9.5% to $217.1 million. EP also increased. Goldcorp's debt-to-equity ratio of 0 is very low, implying successful management of debt levels, and its 2.3 quick ratio demonstrates its ability to cover short-term liquidity needs. The gross profit margin of 49.5% is strong, though it has decreased from the year-ago period. The 53.8% net profit margin significantly outperformed the industry average. We've downgraded Mexican poultry producer Industrias Bachoco ( IBA) from hold to sell, driven by its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself. Net income decreased from $17.4 million in the year-ago quarter to -$70 million in the most recent quarter, significantly underperforming the S&P 500 and the food products industry. Return on equity also greatly decreased, a signal of major weakness. Net operating cash flow significantly decreased to -$21 million. Industrias Bachoco's gross profit margin of 0.7% is extremely low, having decreased from the same period last year, and its net profit margin of -50% is significantly below the industry average.
Shares have tumbled 52.5% over the last year, underperforming the S&P 500, and EPS are down 488.9% compared with the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor, and in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now. We've downgraded cosmetics company Revlon ( REV) from hold to sell, driven by its generally disappointing historical performance in the stock itself, unimpressive growth in net income and weak operating cash flow. Net income decreased by 72.3% compared with the year-earlier quarter, from $40.8 million to $11.3 million, significantly underperforming the S&P 500 and the personal products industry. Net operating cash flow also significantly decreased, to -13 million. Revenue fell by 10.5%, though this was still an outperformance of the industry average. EPS decreased, and Revlon's quick ratio of 0.7 demonstrates weak liquidity. Shares tumbled by 66.6% over the past year, underperforming the S&P 500, and EPS are down 72.5%. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry. Other ratings changes included Home Federal Bancorp ( HOME) and Carver Bancorp ( CARV), both downgraded from hold to sell. All ratings changes generated on Feb. 17 are listed below.
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.