TheStreet Ratings Upgrades & Downgrades

NEW YORK ( TheStreet Ratings) - Every trading day TheStreet Ratings' stock model reviews the investment ratings on around 4,900 U.S. traded stocks for potential upgrades or downgrades based on the latest available financial results and trading activity.

TheStreet Ratings released rating changes on 64 U.S. common stocks for week ending May 27, 2011. 26 stocks were upgraded and 38 stocks were downgraded by our stock model.

Highlighted Upgrades:

Monarch Financial Holdings ( MNRK) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, attractive valuation levels, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, MONARCH FINANCIAL HLDGS INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • The gross profit margin for MONARCH FINANCIAL HLDGS INC is currently very high, coming in at 84.90%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, MNRK's net profit margin of 7.10% significantly trails the industry average.
  • MONARCH FINANCIAL HLDGS INC has improved earnings per share by 23.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, MONARCH FINANCIAL HLDGS INC increased its bottom line by earning $0.75 versus $0.67 in the prior year. This year, the market expects an improvement in earnings ($0.79 versus $0.75).
  • The revenue growth came in higher than the industry average of 3.8%. Since the same quarter one year prior, revenues rose by 14.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.

Monarch Financial Holdings, Inc. operates as the bank holding company for Monarch Bank that provides various banking products and services for businesses, professionals, corporate executives, and individuals. The company has a P/E ratio of 9.7, equal to the average banking industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Monarch Financial has a market cap of $45.3 million and is part of the financial sector and banking industry. Shares are down 1.3% year to date as of the close of trading on Tuesday.

You can view the full Monarch Financial Ratings Report or get investment ideas from our investment research center.

Next upgrade:

Mack-Cali Realty Corporation ( CLI) has been upgraded by TheStreet Ratings from hold to buy.

The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, increase in stock price during the past year, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • CLI, with its decline in revenue, underperformed when compared the industry average of 6.9%. Since the same quarter one year prior, revenues slightly dropped by 4.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • MACK-CALI REALTY CORP has improved earnings per share by 5.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MACK-CALI REALTY CORP reported lower earnings of $0.62 versus $0.90 in the prior year. This year, the market expects an improvement in earnings ($0.76 versus $0.62).
  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The debt-to-equity ratio is somewhat low, currently at 0.96, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.

Mack-Cali Realty Corporation is a real estate investment trust (REIT). It engages in the leasing, management, acquisition, development, and construction of commercial real estate properties in the United States. The company has a P/E ratio of 53.5, above the average real estate industry P/E ratio of 49.6 and above the S&P 500 P/E ratio of 17.7. Mack-Cali has a market cap of $2.9 billion and is part of the financial sector and real estate industry. Shares are up 2.1% year to date as of the close of trading on Wednesday.

You can view the full Mack-Cali Ratings Report or get investment ideas from our investment research center.

Next upgrade:

Blackboard ( BBBB) has been upgraded by TheStreet Ratings from hold to buy.

The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Despite currently having a low debt-to-equity ratio of 0.40, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.35 is very low and demonstrates very weak liquidity.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • The gross profit margin for BLACKBOARD INC is currently very high, coming in at 70.50%. Regardless of BBBB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BBBB's net profit margin of -2.80% significantly underperformed when compared to the industry average.
  • BLACKBOARD INC has exprienced 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. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BLACKBOARD INC increased its bottom line by earning $0.48 versus $0.23 in the prior year. This year, the market expects an improvement in earnings ($1.83 versus $0.48).
  • The revenue growth came in higher than the industry average of 1.2%. Since the same quarter one year prior, revenues rose by 17.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.

Blackboard Inc. provides enterprise software applications and related services to the education industry in the United States and Canada. The company has a P/E ratio of 56.5, below the average computer software & services industry P/E ratio of 181.7 and above the S&P 500 P/E ratio of 17.7. Blackboard has a market cap of $1.5 billion and is part of the technology sector and computer software & services industry. Shares are up 1.2% year to date as of the close of trading on Thursday.

You can view the full Blackboard Ratings Report or get investment ideas from our investment research center.

First downgrade:

Highlighted Downgrades:

Tengasco ( TGC) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • The gross profit margin for TENGASCO INC is rather high; currently it is at 57.30%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -77.60% is in-line with the industry average.
  • The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.75 is somewhat weak and could be cause for future problems.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, TENGASCO INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • TENGASCO INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Stable Earnings per share over the past year indicate the company has sound management over its earnings and share float. During the past fiscal year, TENGASCO INC's EPS of -$0.04 remained unchanged from the prior years' EPS of -$0.04.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 170.2% when compared to the same quarter one year ago, falling from -$1.09 million to -$2.94 million.

Tengasco, Inc. engages in the exploration and production of oil and natural gas in Kansas and Tennessee. The company also leases producing and non-producing properties for exploration and development activities. Tengasco has a market cap of $47 million and is part of the basic materials sector and energy industry. Shares are up 17.2% year to date as of the close of trading on Tuesday.

You can view the full Tengasco Ratings Report or get investment ideas from our investment research center.

Next downgrade:

Rochester Medical Corporation ( ROCM) has been downgraded by TheStreet Ratings from hold to sell.

The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • 49.50% is the gross profit margin for ROCHESTER MEDICAL CORP which we consider to be strong. Regardless of ROCM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ROCM's net profit margin of -9.80% significantly underperformed when compared to the industry average.
  • The share price of ROCHESTER MEDICAL CORP has not done very well: it is down 7.59% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, ROCHESTER MEDICAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income has significantly decreased by 257.7% when compared to the same quarter one year ago, falling from -$0.35 million to -$1.26 million.
  • ROCHESTER MEDICAL CORP has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, ROCHESTER MEDICAL CORP reported poor results of -$0.02 versus $0.00 in the prior year. For the next year, the market is expecting a contraction of 400.0% in earnings (-$0.10 versus -$0.02).

Rochester Medical Corporation develops, manufactures, and markets urinary continence and urine drainage care products for the home care and acute/extended care markets in the United States, Europe, and internationally. Rochester Medical has a market cap of $117.1 million and is part of the health care sector and health services industry.

You can view the full Rochester Medical Ratings Report or get investment ideas from our investment research center.

Next downgrade:

Cavium Networks ( CAVM) has been downgraded by TheStreet Ratings from buy to hold.

The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the stock itself is trading at a premium valuation.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 142.85% and other important driving factors, this stock has surged by 65.57% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market on the basis of return on equity, CAVIUM NETWORKS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • CAVM's debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CAVM has a quick ratio of 2.08, which demonstrates the ability of the company to cover short-term liquidity needs.
  • CAVM's very impressive revenue growth greatly exceeded the industry average of 0.3%. Since the same quarter one year prior, revenues leaped by 52.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.

Cavium Networks, Inc. engages in the design, development, and marketing of semiconductor processors for intelligent and secure networks. The company has a P/E ratio of 49.6, below the average electronics industry P/E ratio of 50.2 and above the S&P 500 P/E ratio of 17.7. Cavium has a market cap of $2.1 billion and is part of the technology sector and electronics industry. Shares are up 14.5% year to date as of the close of trading on Thursday.

You can view the full Cavium Ratings Report or get investment ideas from our investment research center.

-- 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 equity and mutual fund ratings. 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.

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