TheStreet.com 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 total return performance.BOSTON ( TheStreet) -- TheStreet.com's stock-rating model downgraded Crown Castle International ( CCI), which leases telecommunications towers, to "sell." The numbers: While second-quarter revenue increased 8% to $409 million, Crown Castle swung to a net loss of $111 million, or 41 cents per share, from a year-earlier profit of $60 million, or 19 cents. The company was hindered by $110 million of quarterly interest expenses. Its operating margin increased from 19% to 26%, but its net margin fell into negative territory. A quick ratio of 0.8 and a debt-to-equity ratio of 2 demonstrate weak liquidity and excessive leverage. We give Crown Castle a financial strength score of 2.9 out of 10. The stock: Crown Castle has gained 65% this year, beating major U.S. indices. We consider the stock, which doesn't pay dividends, an unattractive investment. The model upgraded chocolate manufacturer Hershey ( HSY) to "buy." The numbers: Second-quarter revenue rose 6% to $1.2 billion as earnings jumped 72% to $71 million, or 31 cents. Its operating margin increased from 12% to 14% and its net margin climbed from 4% to 6%. Just $28 million of cash reserves and a quick ratio of 0.3 indicate a weak liquidity position. A debt-to-equity ratio of 3.9 indicates a capital structure skewed toward debt. Still, Hershey has remained profitable during every quarter of the recession and has a steady revenue stream, which helps compensate for a weak balance sheet. The stock: Hershey has advanced 15% this year, outpacing the Dow Jones Industrial Average and S&P 500 Index. The stock trades at an expensive price-to-earnings ratio of 25, but offers an attractive 3% dividend yield.
The model downgraded oil producer Imperial Oil ( IMO) to "hold." The numbers: Second-quarter revenue dropped 40% to $4.9 billion as net income plummeted 82% to $209 million and earnings per share declined 80% to 25 cents, cushioned by a lower share count. The operating margin fell from 16% to 5% and the net margin shrank from 14% to 4%. Imperial has a weak liquidity position, with just $390 million of cash reserves and a quick ratio of 0.6. But the company has minimal debt and a debt-to-equity that's well below the industry average, indicating fiscal prudence. The stock: Imperial Oil is up 21% this year, beating the Dow and S&P 500. The stock trades at a fair price-to-earnings ratio of 15, but offers a dividend yield below 1%. By comparison, stocks in the S&P 500 offer an average dividend yield of 3.4%. The model upgraded drugmaker Novartis ( NVS) to "buy." The numbers: Second-quarter revenue declined 2% to $10.5 billion as earnings fell 10% to $2 billion, or 89 cents. The operating margin improved from 22% to 23%, but the net margin fell from 21% to 19%. Novartis has a strong financial position, with nearly $12 billion of cash, amounting to a quick ratio of 1.2. It has a debt-to-equity ratio of 0.3. The stock: Novartis is down 8% this year, lagging major U.S. indices. The stock trades at a fair price-to-earnings ratio of 13 and offers an attractive 3.8% dividend yield. The model upgraded packaging products manufacturer Greif ( GEF) to "buy." The numbers: Second-quarter revenue decreased 29% to $648 million as earnings declined 75% to $12 million, or 26 cents. The operating margin increased from 8% to 9%, but the net margin dropped from 5% to 2%. A quick ratio of 0.9 indicates a less-than-ideal liquidity position. And a debt-to-equity ratio of 0.9 indicates a debt burden larger than industry peers. Still, Greif has a stable business model and retained profitability during the recession. We give the company a financial strength score of 7 out of 10, which is on par with our "buy"-rated average. The stock: Greif has surged 55% in 2009, outpacing major U.S. indices. The stock trades at a fair price-to-earnings ratio of 18 and offers an attractive 3% dividend yield. -- Reported by Jake Lynch in Boston.