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 Thursday, April 23.

We've upgraded Air Products & Chemicals ( APD) from hold to buy, driven by its expanding profit margins over time. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Air Products' gross profit margin of 36.4% has increased from the same quarter last year, and its net profit margin of 10.5% is above the industry average. Revenue fell 24.9% compared with the year-ago quarter, and EPS declined by 22.6%. We feel the company is likely to report an earnings decline in the coming year. Net income fell 34.6%, from $314.3 million in the year-ago quarter to $205.6 million in the most recent quarter. Air Products' debt-to-equity ratio of 0.9 is somewhat low overall but high compared with the industry average. The quick ratio of 0.7 implies weak liquidity.

We've upgraded pharmacy services company CVS Caremark ( CVS) from hold to buy, driven by its revenue growth, impressive record of earnings per share growth, compelling growth in net income, attractive valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins.

Revenue rose by 10% since the year-ago quarter, and EPS are up 18.2%. We expect that the company's two-year pattern of EPS growth should continue in the coming year. Net income increased 16.9%, from $815 million in the year-ago quarter to $952.8 million. Net operating cash flow is up 30.3% to $1.8 billion.

We've upgraded sporting goods retailer Dick's Sporting Goods ( DKS) from sell to hold. Strengths include the company's largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

The debt-to-equity ratio of 0.3 is low, though it is above the industry average, and the 0.2 quick ratio implies difficulty paying short-term obligations. Net operating cash flow of $247.6 million has not changed significantly compared with the year-ago quarter. Revenue fell by 0.4% since the same quarter last year, and EPS also decreased. Return on equity fell compared with the year-ago quarter, a signal of weakness within the corporation. The company's gross profit margin of 31.2% has decreased from the year-ago quarter. The net profit margin of -8.6% is below the industry average.

We've upgraded Philips Electronics ( PHG), which engages in the health care, consumer lifestyle and lighting product businesses, from sell to hold. Strengths include the company's good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

Net operating cash flow increased 28.7% to $2.5 billion compared with the year-ago quarter. The 40.9% gross profit margin has increased from the year-ago quarter, and the net profit margin of -20.1% is in line with the industry average. The debt-to-equity ratio of 0.3 is below the industry average, implying successful debt-level management. The quick ratio of 0.9 is somewhat weak. Net income fell from $2.1 billion in the year-ago quarter to -$2.1 billion in the most recent quarter. Return on equity also decreased, implying weakness within the corporation.

We've upgraded St. Jude Medical ( STJ), which develops, manufactures and distributes cardiovascular and implantable neurostimulation medical devices, from hold to buy. This rating is driven by the company's revenue growth, growth in earnings per share, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and increase in net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Revenue rose by 12.2% since the same quarter last year, and EPS also improved by 9.4%. We feel the company is poised for EPS growth in the coming year. The 74% gross profit margin has decreased from the year-ago quarter. The net profit margin trails the industry average. The debt-to-equity ratio of 0.4 is above the industry average. The 1.5 quick ratio is sturdy. Net income is up 8.9%, from $184.8 million in the year-ago quarter to $201.3 million.

Other ratings changes include UniFirst ( UNF), upgraded from hold to buy, and Dover ( DOV), downgraded from hold to sell.

All ratings changes from April 23 are listed below:

Ticker
Company
Current
Change
Previous
AGT
Apollo Gold
SELL
Downgrade
HOLD
APD
Air Products & Chemicals
BUY
Upgrade
HOLD
BIG
Big Lots
BUY
Upgrade
HOLD
BMI
Badger Meter
BUY
Upgrade
Upgrade
BPO
Brookfield Properties
HOLD
Upgrade
SELL
CLB
Core Laboratories
BUY
Upgrade
HOLD
CVS
CVS Caremark
BUY
Upgrade
HOLD
DKS
Dick's Sporting Goods
HOLD
Upgrade
SELL
DOV
Dover
SELL
Downgrade
HOLD
FLXS
Flexsteel Industries
SELL
Downgrade
HOLD
GFRE
Diversifax
HOLD
Initiated
JCOM
J2 Global Communications
BUY
Upgrade
HOLD
MKSI
MKS Instruments
SELL
Downgrade
HOLD
NECB
Northeast Community Bancorp
HOLD
Upgrade
SELL
PETD
Petroleum Development
HOLD
Upgrade
SELL
PHG
Philips Electronics
HOLD
Upgrade
SELL
STJ
St. Jude Medical
BUY
Upgrade
HOLD
UNF
Unifirst
BUY
Upgrade
HOLD
VCP
Votorantin
SELL
Downgrade
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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