TheStreet Ratings Top 10 Rating Changes

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 84 U.S. common stocks for week ending June 3, 2011. 44 stocks were upgraded and 40 stocks were downgraded by our stock model.

Rating Change #10

Phillips-Van Heusen Corporation ( PVH) 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, compelling growth in net income, increase in stock price during the past year, growth in earnings per share and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • 49.30% is the gross profit margin for PHILLIPS-VAN HEUSEN CORP which we consider to be strong. Regardless of PVH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.20% trails the industry average.
  • PHILLIPS-VAN HEUSEN CORP reported significant earnings per share improvement 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, PHILLIPS-VAN HEUSEN CORP reported lower earnings of $0.53 versus $3.08 in the prior year. This year, the market expects an improvement in earnings ($4.90 versus $0.53).
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry. The net income increased by 308.8% when compared to the same quarter one year prior, rising from -$27.61 million to $57.67 million.
  • PVH's very impressive revenue growth greatly exceeded the industry average of 4.7%. Since the same quarter one year prior, revenues leaped by 121.2%. Growth in the company's revenue appears to have helped boost the earnings per share.

Phillips-Van Heusen Corporation designs and markets branded dress shirts, neckwear, sportswear, footwear, and other related products worldwide. The company has a P/E ratio of 81.2, below the average consumer non-durables industry P/E ratio of 83.2 and above the S&P 500 P/E ratio of 17.7. Phillips-Van Heusen has a market cap of $4.5 billion and is part of the consumer goods sector and consumer non-durables industry. Shares are up 4.7% year to date as of the close of trading on Wednesday.

You can view the full Phillips-Van Heusen Ratings Report or get investment ideas from our investment research center.

Rating Change #9

Masco Corporation ( MAS) has been upgraded by TheStreet Ratings from sell to hold. The company's strongest point has been its solid financial position based on a variety of debt and liquidity measures that we have looked at. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • 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 Building Products industry. The net income has significantly decreased by 557.1% when compared to the same quarter one year ago, falling from -$7.00 million to -$46.00 million.
  • The gross profit margin for MASCO CORP is currently lower than what is desirable, coming in at 28.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.60% trails that of the industry average.
  • MASCO 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. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, MASCO CORP reported poor results of -$2.99 versus -$0.40 in the prior year. This year, the market expects an improvement in earnings ($0.20 versus -$2.99).
  • MAS, with its decline in revenue, slightly underperformed the industry average of 0.8%. Since the same quarter one year prior, revenues slightly dropped by 4.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.

Masco Corporation manufactures, distributes, and installs home improvement and building products in North America and Europe. Masco has a market cap of $5.1 billion and is part of the industrial goods sector and materials & construction industry. Shares are up 12.6% year to date as of the close of trading on Wednesday.

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

Rating Change #8

Wyndham Worldwide Corporation ( WYN) 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, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had generally poor debt management on most measures that we evaluated.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Hotels, Restaurants & Leisure industry average. The net income increased by 44.0% when compared to the same quarter one year prior, rising from $50.00 million to $72.00 million.
  • WYNDHAM WORLDWIDE CORP reported significant earnings per share improvement 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 two years. We feel that this trend should continue. During the past fiscal year, WYNDHAM WORLDWIDE CORP increased its bottom line by earning $2.05 versus $1.61 in the prior year. This year, the market expects an improvement in earnings ($2.27 versus $2.05).
  • Powered by its strong earnings growth of 51.85% and other important driving factors, this stock has surged by 47.50% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, WYN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • WYN's revenue growth has slightly outpaced the industry average of 0.8%. Since the same quarter one year prior, revenues slightly increased by 7.4%. Growth in the company's revenue appears to have helped boost the earnings per share.

Wyndham Worldwide Corporation, together with its subsidiaries, provides various hospitality products and services to individual consumers and business customers in the United States and internationally. The company has a P/E ratio of 15.9, equal to the average leisure industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Wyndham Worldwide has a market cap of $5.9 billion and is part of the services sector and leisure industry. Shares are up 16.2% year to date as of the close of trading on Wednesday.

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

Rating Change #7

Telephones of Mexico ( TFONY) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Diversified Telecommunication Services industry and the overall market, TELMEX-TELEFONOS DE MEXICO's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • TFONY, with its decline in revenue, underperformed when compared the industry average of 13.5%. Since the same quarter one year prior, revenues slightly dropped by 0.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • TELMEX-TELEFONOS DE MEXICO's earnings per share declined by 17.1% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, TELMEX-TELEFONOS DE MEXICO reported lower earnings of $1.35 versus $1.70 in the prior year. This year, the market expects an improvement in earnings ($1.38 versus $1.35).
  • TFONY's share price has surged by 26.47% over the past year, reflecting the market's general trend, despite their weak earnings growth during the last quarter. Regarding the stock's future course, although almost any stock can fall in a broad market decline, TFONY should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The gross profit margin for TELMEX-TELEFONOS DE MEXICO is rather high; currently it is at 61.50%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 13.60% is above that of the industry average.

Telefonos de Mexico, S.A.B. de C.V. provides telecommunications services primarily in Mexico. It offers local telephone service; domestic and international long distance services; and interconnection services to long-distance, local, and mobile phone carriers. The company has a P/E ratio of 0.9, below the S&P 500 P/E ratio of 17.7. Telephones of Mexico has a market cap of $16.8 billion and is part of the technology sector and telecommunications industry. Shares are up 11.2% year to date as of the close of trading on Wednesday.

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

Rating Change #6

Merck ( MRK) 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, largely solid financial position with reasonable debt levels by most measures, increase in net income, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • MERCK & CO reported significant earnings per share improvement 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, MERCK & CO reported lower earnings of $0.27 versus $5.37 in the prior year. This year, the market expects an improvement in earnings ($3.73 versus $0.27).
  • Net operating cash flow has increased to $1,721.00 million or 25.97% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -5.33%.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 249.1% when compared to the same quarter one year prior, rising from $298.80 million to $1,043.00 million.
  • The current debt-to-equity ratio, 0.33, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.34, which illustrates the ability to avoid short-term cash problems.
  • MRK's revenue growth has slightly outpaced the industry average of 1.0%. Since the same quarter one year prior, revenues slightly increased by 1.4%. Growth in the company's revenue appears to have helped boost the earnings per share.

Merck & Co., Inc. provides various health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products. The company has a P/E ratio of 68.3, equal to the average drugs industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Merck has a market cap of $111.8 billion and is part of the health care sector and drugs industry. Shares are up 2% year to date as of the close of trading on Wednesday.

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

Rating Change #5

VeriFone Systems Inc ( PAY) 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, impressive record of earnings per share growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including premium valuation and disappointing return on equity.

Highlights from the ratings report include:
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to other companies in the IT Services industry and the overall market on the basis of return on equity, VERIFONE SYSTEMS INC has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 135.22% over the past year, a rise that has exceeded that of the S&P 500 Index. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • VERIFONE SYSTEMS INC has improved earnings per share by 17.4% 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, VERIFONE SYSTEMS INC turned its bottom line around by earning $1.11 versus -$1.86 in the prior year. This year, the market expects an improvement in earnings ($1.81 versus $1.11).
  • PAY's revenue growth has slightly outpaced the industry average of 14.6%. Since the same quarter one year prior, revenues rose by 21.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.

VeriFone Systems, Inc. designs, markets, and services electronic payment solutions that enable secure electronic payments among consumers, merchants, and financial institutions worldwide. The company has a P/E ratio of 34.1, below the average consumer durables industry P/E ratio of 34.4 and above the S&P 500 P/E ratio of 17.7. VeriFone Systems has a market cap of $4.1 billion and is part of the consumer goods sector and consumer durables industry. Shares are up 22.3% year to date as of the close of trading on Friday.

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

Rating Change #4

Coca-Cola Hellenic Bottling Company ( CCH) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • Net operating cash flow has significantly decreased to -$6.48 million or 103.69% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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. When compared to other companies in the Beverages industry and the overall market, COCA-COLA HELLENIC BOTTLING's return on equity is below that of both the industry average and the S&P 500.
  • CCH's debt-to-equity ratio of 0.83 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further.
  • CCH's revenue growth trails the industry average of 18.2%. Since the same quarter one year prior, revenues slightly increased by 6.5%. 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.

Coca-Cola Hellenic Bottling Company S.A. operates as a bottler and vendor of The Coca-Cola Company's products in Europe and internationally. It produces, sells, and distributes nonalcoholic ready-to-drink beverages. The company has a P/E ratio of 14.9, below the average food & beverage industry P/E ratio of 15.5 and below the S&P 500 P/E ratio of 17.7. Coca-Cola Hellenic has a market cap of $8.8 billion and is part of the consumer goods sector and food & beverage industry. Shares are down 2.6% year to date as of the close of trading on Wednesday.

You can view the full Coca-Cola Hellenic Ratings Report or get investment ideas from our investment research center.

Rating Change #3

SK Telecom ( SKM) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we find that net income has been generally deteriorating over time.

Highlights from the ratings report include:
  • 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 Wireless Telecommunication Services industry. The net income has decreased by 9.2% when compared to the same quarter one year ago, dropping from $395.16 million to $358.95 million.
  • SK TELECOM CO LTD's earnings per share declined by 10.0% 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, SK TELECOM CO LTD increased its bottom line by earning $1.62 versus $1.44 in the prior year. This year, the market expects an improvement in earnings ($1.95 versus $1.62).
  • When compared to other companies in the Wireless Telecommunication Services industry and the overall market, SK TELECOM CO LTD's return on equity is below that of both the industry average and the S&P 500.
  • The current debt-to-equity ratio, 0.41, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.21, which illustrates the ability to avoid short-term cash problems.
  • The revenue growth significantly trails the industry average of 84.0%. Since the same quarter one year prior, revenues slightly increased by 5.0%. 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.

SK Telecom Co., Ltd. provides wireless telecommunications services in Korea. The company has a P/E ratio of one, below the average telecommunications industry P/E ratio of 9.7 and below the S&P 500 P/E ratio of 17.7. SK Telecom has a market cap of $11.8 billion and is part of the technology sector and telecommunications industry. Shares are down 5% year to date as of the close of trading on Wednesday.

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

Rating Change #2

Sony Corporation ( SNE) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • The gross profit margin for SONY CORP is currently extremely low, coming in at 6.70%. It has decreased from the same quarter the previous year.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Household Durables industry and the overall market, SONY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • SONY 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SONY CORP reported poor results of -$3.14 versus -$0.43 in the prior year. This year, the market expects an improvement in earnings ($0.85 versus -$3.14).
  • 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. Despite the fact that SNE's debt-to-equity ratio is low, the quick ratio, which is currently 0.58, displays a potential problem in covering short-term cash needs.
  • The revenue growth came in higher than the industry average of 13.9%. Since the same quarter one year prior, revenues slightly increased by 4.2%. 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.

Sony Corporation designs, develops, manufactures, and sells electronic equipment, instruments, and devices for consumer, professional, and industrial markets worldwide. The company has a P/E ratio of 7.6, below the S&P 500 P/E ratio of 17.7. Sony has a market cap of $27 billion and is part of the consumer goods sector and consumer durables industry. Shares are down 25.1% year to date as of the close of trading on Wednesday.

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

Rating Change #1

Petroleo Brasileiro SA Petrobras ( PBR.A) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PETROBRAS-PETROLEO BRASILIER's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • In its most recent trading session, PBR.A has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
  • 38.80% is the gross profit margin for PETROBRAS-PETROLEO BRASILIER which we consider to be strong. Regardless of PBR.A's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PBR.A's net profit margin of 20.00% significantly outperformed against the industry.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 23.4%. Since the same quarter one year prior, revenues rose by 18.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry average. The net income increased by 51.1% when compared to the same quarter one year prior, rising from $4,317.00 million to $6,524.00 million.

Petroleo Brasileiro S.A. primarily engages in oil and natural gas exploration and production, refining, trade, and transportation businesses. The company has a P/E ratio of 8.8, below the S&P 500 P/E ratio of 17.7. Petroleo Brasileiro SA Petrobras has a market cap of $203.9 billion and is part of the basic materials sector and energy industry. Shares are down 10.6% year to date as of the close of trading on Thursday.

You can view the full Petroleo Brasileiro SA Petrobras 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.

For all other upgrades and downgrades made by TheStreet Ratings Model today check out our upgrades and downgrades list.

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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