TAM Airlines - Upgrades & Downgrades

NEW YORK ( TheStreet) -TheStreet Ratings' stock model downgraded Tam SA ( TAM) to 'Sell' from 'Hold'. This South American airline which connects Miami and New York to Brazil, Paraguay, Argentina, and Chile looks to be flying into a stormy earnings season.

TheStreet Ratings released rating changes on only one U.S. common stocks for July 13, 2010. Just one stock has been downgraded and no stocks have been upgraded by our stock model.

TAM Airlines has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently and may report a decline in earnings in the coming year. For the next year, the market is expecting a contraction of 90% in earnings ($0.25 versus $2.49).

Net operating cash outflow at TAM Airlines of $207 million has shown significantly deterioration when compared to the same quarter last year. The net income flipped to a loss of $32.6 million from a gain of $7.4 million when compared to the same quarter one year ago.

TAM's gross profit margin for the first quarter of its fiscal year 2010 has significantly decreased when compared to the same period a year ago. Even though sales increased, the net income has decreased, representing a decrease to the bottom line.

TAM has weak liquidity. Currently, the Quick Ratio is 0.92 which shows a lack of ability to cover short-term cash needs. Overall, key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the future.

Even though the stock's performance recently has been a positive, the TheStreet Ratings' stock model judges that the financial risks have increased thus prompting the downgrade to a 'Sell' recommendation.

-- Reported by Kevin Baker in Jupiter, Fla.

For additional Investment Research check out our Ratings Research Center.

Kevin Baker became the senior financial analyst for TheStreet Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.

More from Investing

REPLAY: Jim Cramer on How to Navigate the Stock Market Amid Tariff Worries

REPLAY: Jim Cramer on How to Navigate the Stock Market Amid Tariff Worries

Will Kraft Heinz Buy Pepsico or Mondelez?

Will Kraft Heinz Buy Pepsico or Mondelez?

Jim Cramer: 4 Stocks Could Get Throttled By a 'Knock Down Drag Out' With China

Jim Cramer: 4 Stocks Could Get Throttled By a 'Knock Down Drag Out' With China

Why Starbucks Latest Data Reveal Should Worry Investors

Why Starbucks Latest Data Reveal Should Worry Investors

Starbucks Sets Latest Plan to Recaffeinate Shares

Starbucks Sets Latest Plan to Recaffeinate Shares