Ratings Changes: Disney, W.P. Carey

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TheStreet.com's stock-rating model downgraded Walt Disney ( DIS) to "hold." The company operates as a diversified entertainment company worldwide.

The numbers: Fiscal second-quarter revenue declined 7.2% from a year earlier to $8.1 billion as net income fell 46% to $613 million and earnings per share dropped 43% to 33 cents. Operating margin fell from 22% to 16% and net margin dropped from 13% to 7.6%. A debt-to-equity ratio of 0.4 indicates a modest debt load. But a quick ratio of 0.8 reflects less-than-ideal liquidity.

The stock: Disney is down 1% this year, keeping pace with the S&P 500 Index. The stock trades at a low price-to-earnings ratio of 12 and offers a lackluster 1.6% dividend yield.

The model upgraded PSS World Medical ( PSSI) to "buy." The company distributes medical products, equipment and billing services to health care providers in the U.S.

The numbers: Fiscal fourth-quarter revenue decreased 4.9% to $469 million as net income fell 20% to $16 million and earnings per share dropped 16% to 26 cents. Operating margin fell from 6% to 5.7% as net margin fell from 3.9% to 3.3%. The company's cash balance has surged 338% since the year-ago quarter and stands strong at $92 million. A debt-to-equity ratio of 0.8 indicates conservative leverage.

The stock: PSS World Medical is down 7% this year, underperforming the Dow Jones Industrial Average and the S&P 500. The stock trades at an expensive price-to-earnings ratio of 18 and doesn't pay dividends.

The model upgraded SmartPros ( SPRO) to "buy." The company provides training and seminars for accountants, lawyers and finance professionals.

The numbers: First-quarter revenue increased 12% to $4.4 million as net income rose to $300,000 and earnings per share increased to 1 cent from a net loss in the year-ago quarter. Operating margin increased to 0.6% from -6.2% and its net margin inched past breakeven. The company has a strong financial position, evident in its $7 million cash balance, quick ratio of 1.3 and zero debt.

The stock: SmartPros has gained 72% this year, outperforming major U.S. indices. The stock trades at a low price to earnings ratio of 11 and does not pay dividends.

The model upgraded Targa Resources Partners ( NGLS) to "buy." The company gathers, processes and sells natural gas.

The numbers: First-quarter revenue plunged 53% to $239 million as the company swung to a net loss of $2.1 million from a net profit of $25 million in last year's first quarter. Operating margin dropped from 6.6% to 3.1% and net margin dipped into negative territory. But the company has a strong financial position, having nearly tripled its cash reserves to $62 million since the year-ago quarter. A debt-to-equity ratio of 0.9 is acceptable, but not ideal.

The stock: Targa is up 86% in 2009, outperforming all major U.S. indices. The stock trades at a fair price-to-earnings ratio of 12 and offers a 14% cash distribution yield. Cash distributions are taxed differently than dividends.

The model downgraded W.P. Carey ( WPC) to "hold." The company manages investments and real estate funds, and provides long-term lease financing.

The numbers: First-quarter revenue increased 8.5% to $62 million as net income climbed 3.5% to $18 million and earnings per share inched up 2.3% to 44 cents. Operating margin increased from 37% to 38%, but net margin dropped from 30% to 29%. The company has a low debt-to-equity ratio of 0.56 and $22 million of cash, indicating an adequate liquidity position.

The stock: W.P. Carey is flat in 2009, outperforming the Dow and the S&P 500. The stock trades at a fair price-to-earnings ratio of 13 and offers a high 8.5% dividend yield.