TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.

The following ratings changes were generated on Monday, April 13.

We've upgraded Apple ( AAPL) from hold to buy, driven by its increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Net income increased 1.5% compared with the same quarter last year to $1.6 million. Revenue increased by 5.8%, and earnings per share also improved. Apple has no debt to speak of and a quick ratio or 2, demonstrating its ability to cover short-term liquidity needs. Its 36.3% gross profit margin is strong, having increased from the year-ago quarter, and its net profit margin of 15.8% is above the industry average. Net operating cash flow increased 41.3% to $3.9 billion compared with the year-ago quarter.

We've upgraded Enterprise Products Partners ( EPD) from hold to buy, driven by its compelling growth in net income, notable return on equity 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.

Net income increased by 40.9% compared with the same quarter a year ago, from $161.9 million to $228.1 million. Return on equity also rose, a clear sign of strength within the company. EPS are up 46.7% in the most recent quarter compared with the year-ago quarter, though we anticipate underperformance in the coming year relative to the company's two-year pattern of EPS growth. Revenue fell 32.3% compared with the prior-year quarter. EPP's gross profit margin is 14.3%, though it has managed to increased since the same period last year. Its net profit margin of 6.4% compared favorably with the industry average.

We've upgraded Giant Interactive Group ( GA) from sell to hold. Strengths include the company's largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. However, we find that the growth in the company's earnings per share has not been good.

Giant Interactive has no debt to speak of. It underperforms the S&P 500 and the software industry on the basis of ROE. Revenue fell 16% since the year-ago quarter, though EPS are stable. Net income fell 10.1% compared with the year-ago quarter, from $48.7 million to $43.8 million. Shares are down 43.2% over the past year, underperforming the S&P 500.

We've downgraded Piper Jaffray ( PJC) from hold to sell, driven by its deteriorating net income, disappointing return on equity, weak operating cash flow, decline in the stock price during the past year and feeble growth in its earnings per share.

Net income fell from $15.1 million in the year-ago quarter to -$153.3 million in the most recent quarter. ROE also decreased, and net operating cash flow fell to -$33.7 million. EPS delinked in the most recent quarter compared with the same quarter last year, though the consensus estimate suggests that the company's two-year trend of declining EPS should reverse in the coming year.

Shares are down 17.6% over the past year, in part reflecting the market's overall decline. The fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

We've downgraded Shaw Group ( SGR) from hold to sell, driven by its generally disappointing historical performance in the stock itself, weak operating cash flow and poor profit margins.

Net operating cash flow fell 42.6% to $112.7 million compared with the same quarter a year ago. Shaw's gross profit margin is 7.2%, though it has increased since the year-ago quarter. Its net profit margin of 2.2% trails the industry average. Shaw's debt-to-equity ratio or 1 is somewhat low overall but high compared with the industry average. Its 0.9 quick ratio is weak. ROE has improved slightly compared with the year-ago quarter.

Shares are down 49.2% over the past year, underperforming the S&P 500, but 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, Shaw Group is still more expensive than most of the other companies in its industry.

Other ratings changes include Movado Group ( MOV), downgraded from hold to sell, and Synopsys ( SNPS), upgraded from hold to buy.

All ratings changes from April 13 are listed below.

 
Ticker
Company
Current
Change
Previous
AAPL Apple BUY Upgrade HOLD
AKO.A Embotelladora Andina BUY Upgrade HOLD
DORM Dorman Products BUY Upgrade HOLD
EPD Enterprise Products Partners BUY Upgrade HOLD
FISI Financial Institutions SELL Downgrade HOLD
FNDT FundTech HOLD Upgrade SELL
GA Giant Interactive HOLD Upgrade SELL
HUSA Houston American Energy SELL Downgrade HOLD
IBAL International Baler SELL Downgrade HOLD
MOV Movado Group SELL Downgrade HOLD
PCAP Patriot Capital Funding SELL Downgrade HOLD
PJC Piper Jaffray SELL Downgrade HOLD
SGR Shaw Group SELL Downgrade HOLD
SMSC Standard Microsystems SELL Downgrade HOLD
SNPS Synopsys BUY Upgrade HOLD
 

Note: Our quantitative model makes stock recommendations based on GAAP figures that may differ materially from data as reported by the companies themselves. As a result, rating changes are occasionally driven by so-called nonrecurring items. As always, we urge readers to use TSC Ratings' reports in conjunction with additional information to construct their opinions on the value that should be placed on any given stock.

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