Ashland, BP Prudhoe: Ratings Changes

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 upgraded Ashland ( ASH), a chemical and construction materials company, to "hold."

The numbers: Fiscal third-quarter net income dropped 31% to $50 million and earnings per share fell 34% to 68 cents, hurt by a higher share count. Revenue declined 7% to $2 billion. Its gross margin rose from 18% to 29% and its operating margin climbed from 3% to 8%. A quick ratio of 1.2 demonstrates adequate liquidity. A debt-to-equity ratio of 0.5 is below the industry average, indicating restrained leverage.

The stock: Ashland has surged 308% this year, handily beating major U.S. indices. The company succumbed to losses in its fourth-quarter and first-quarter. The shares pay a 0.7% dividend yield.

The model upgraded BP Prudhoe Bay Royalty Trust ( BPT), a trust with royalty interests in Alaskan oil fields, to "buy."

The numbers: Second-quarter net income fell 63% to $21 million, or 99 cents a share. Revenue declined a comparable amount. The trust's gross margin remained steady at 100% and its operating margin was little-changed at 99%. The trust holds no debt and $1 million of cash reserves, amounting to a quick ratio of 5.3.

The stock: BP Prudhoe Bay Royalty Trust is flat this year, lagging behind major U.S. indices. The stock trades at a price-to-earnings ratio of 8, a discount to the market and oil and gas peers. The shares pay a royalty yield of 9%. Royalties are taxed differently than dividends.

The model upgraded Cintas ( CTAS), a manufacturer of corporate-identity uniforms and other items, to "buy."

The numbers: Fiscal first-quarter profit dropped 31% to $54 million, or 35 cents a share, as revenue declined 11% to $892 million. Its gross margin rose from 46% to 47%, but its operating margin decreased from 14% to 13%. A quick ratio of 2.3 demonstrates strong liquidity. A debt-to-equity ratio of 0.3 shows conservative leverage.

The stock: Cintas has ascended 27% this year, beating the Dow Jones Industrial Average and S&P 500 Index. The stock trades at a price-to-earnings ratio of 20, indicating parity with the market, but a discount to diversified support service peers. The shares pay a 1.6% dividend yield.

The model upgraded semiconductor manufacturer GSI Technology ( GSIT) to "buy."

The numbers: Fiscal first-quarter net income dropped 30% to $2.1 million and earnings per share fell 27% to 8 cents, cushioned by a lower share count. Revenue fell 18% to $14 million. Its gross margin declined from 46% to 45% and its operating margin decreased from 23% to 17%. The company has an ideal financial position, with no debt and ample liquidity, evident in its quick ratio of 6.2.

The stock: GSI Technology is up 37% this year, outpacing major U.S. indices. The stock trades at a price-to-earnings ratio of 13, a discount to the market and semiconductor peers. The company does not pay dividends.

The model upgraded consumer finance company QC Holdings ( QCCO) to "buy."

The numbers: Second-quarter net income surged 185% to $4.3 million and earnings per share climbed 92% to 25 cents. Revenue remained steady at $52 million. Its gross margin rose from 31% to 36% and its operating margin climbed from 10% to 15%. A quick ratio of 2.2 indicates strong liquidity. A debt-to-equity ratio of 1 reflects higher-than-ideal leverage.

The stock: QC Holdings is up 75% this year, more than major U.S. indices. The stock trades at a price-to-earnings ratio of 7, a discount to the market and consumer finance peers. The shares pay a 3% dividend yield.

-- Reported by Jake Lynch in Boston.

More from Opinion

Trump Blinks on China Trade War That's Looking Harder to Win

Trump Blinks on China Trade War That's Looking Harder to Win

Monday Madness: GE, China, and Micron

Monday Madness: GE, China, and Micron

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

How Technology Will Unleash the Legal Marijuana Industry's Growth Potential

How Technology Will Unleash the Legal Marijuana Industry's Growth Potential

Apple Buys Tesla? Amazon Buys Sears? 3 Dream Mergers That Just Make Sense

Apple Buys Tesla? Amazon Buys Sears? 3 Dream Mergers That Just Make Sense