TheStreet Ratings Top 10 Rating Changes

NEW YORK ( TheStreet Ratings) -- Every trading day TheStreet Ratings' stock model reviews the investment ratings on around 4,800 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 37 U.S. common stocks for week ending October 14, 2011. 16 stocks were upgraded and 21 stocks were downgraded by our stock model.

Rating Change #10

Harris Corporation ( HRS) 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, attractive valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and unimpressive growth in net income.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 10.7%. Since the same quarter one year prior, revenues rose by 14.5%. 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.
  • HARRIS CORP's earnings per share declined by 8.6% 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, HARRIS CORP increased its bottom line by earning $4.60 versus $4.28 in the prior year. This year, the market expects an improvement in earnings ($5.14 versus $4.60).
  • The change in net income from the same quarter one year ago has exceeded that of the Communications Equipment industry average, but is less than that of the S&P 500. The net income has decreased by 11.8% when compared to the same quarter one year ago, dropping from $151.40 million to $133.50 million.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, HRS has underperformed the S&P 500 Index, declining 18.28% from its price level of one year ago. 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.

Harris Corporation, together with its subsidiaries, operates as a communications and information technology company that serves government and commercial markets worldwide. It operates in three segments: RF Communications, Integrated Network Solutions, and Government Communications Systems. The company has a P/E ratio of 7.9, equal to the average telecommunications industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Harris has a market cap of $4.3 billion and is part of the technology sector and telecommunications industry. Shares are down 20.2% year to date as of the close of trading on Friday.

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

Rating Change #9

InterOil Corporation ( IOC) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, INTEROIL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for INTEROIL CORP is currently extremely low, coming in at 9.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 7.90% trails that of the industry average.
  • Net operating cash flow has significantly decreased to -$53.43 million or 80.62% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • IOC's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 38.57%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • INTEROIL CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, INTEROIL CORP swung to a loss, reporting -$1.01 versus $0.14 in the prior year.

InterOil Corporation primarily engages in the exploration, appraisal, and development of crude oil and natural gas properties in Papua New Guinea. It also involves in the refining and liquefaction of jet fuel, diesel, and gasoline, as well as naphtha and low sulfur waxy residue. InterOil has a market cap of $2 billion and is part of the basic materials sector and energy industry. Shares are down 43% year to date as of the close of trading on Wednesday.

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

Rating Change #8

K12 ( LRN) 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 good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 5.2%. Since the same quarter one year prior, revenues rose by 45.2%. 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.
  • LRN's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.48, which clearly demonstrates the ability to cover short-term cash needs.
  • 48.80% is the gross profit margin for K12 INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -2.20% is in-line with the industry average.
  • 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 Diversified Consumer Services industry. The net income has significantly decreased by 114.6% when compared to the same quarter one year ago, falling from -$1.33 million to -$2.84 million.
  • 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 Diversified Consumer Services industry and the overall market, K12 INC's return on equity significantly trails that of both the industry average and the S&P 500.

K12 Inc., a technology-based education company, provides proprietary curriculum, software systems, and educational services for individualized learning for students in kindergarten through 12th grade (K12) primarily in the United States. The company has a P/E ratio of 83.9, above the average diversified services industry P/E ratio of 75.7 and above the S&P 500 P/E ratio of 17.7. K12 has a market cap of $1.1 billion and is part of the services sector and diversified services industry. Shares are up 11.1% year to date as of the close of trading on Wednesday.

You can view the full K12 Ratings Report or get investment ideas from our investment research center.

Rating Change #7

Carrizo Oil & Gas ( CRZO) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally weak debt management and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The debt-to-equity ratio of 1.28 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.36, which clearly demonstrates the inability to cover short-term cash needs.
  • CRZO has underperformed the S&P 500 Index, declining 12.03% from its price level of one year ago. 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 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 Oil, Gas & Consumable Fuels industry and the overall market, CARRIZO OIL & GAS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CARRIZO OIL & GAS INC is currently very high, coming in at 80.50%. It has increased significantly from the same period last year. Along with this, the net profit margin of 15.30% is above that of the industry average.
  • Net operating cash flow has significantly increased by 65.30% to $21.85 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 38.85%.

Carrizo Oil & Gas, Inc., together with its subsidiaries, engages in the exploration, development, and production of oil and gas in the United States and United Kingdom. Carrizo Oil & Gas has a market cap of $880.7 million and is part of the basic materials sector and energy industry. Shares are down 35% year to date as of the close of trading on Thursday.

You can view the full Carrizo Oil & Gas Ratings Report or get investment ideas from our investment research center.

Rating Change #6

Cal-Maine Foods ( CALM) 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 reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and poor profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 16.5%. Since the same quarter one year prior, revenues rose by 28.1%. 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.
  • CALM's debt-to-equity ratio is very low at 0.20 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CALM has a quick ratio of 2.17, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. 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.
  • 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 Food Products industry. The net income has significantly decreased by 34.5% when compared to the same quarter one year ago, falling from $4.76 million to $3.12 million.
  • The gross profit margin for CAL-MAINE FOODS INC is rather low; currently it is at 17.00%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.30% trails that of the industry average.

Cal-Maine Foods, Inc. engages in the production, grading, packaging, distribution, and marketing of shell eggs primarily in approximately 29 states in the southeastern, southwestern, mid-western, and mid-Atlantic regions of the United States. The company has a P/E ratio of 13.1, equal to the average food & beverage industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Cal-Maine has a market cap of $692.2 million and is part of the consumer goods sector and food & beverage industry. Shares are up 2.1% year to date as of the close of trading on Thursday.

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

Rating Change #5

Cisco Systems ( CSCO) 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, attractive valuation levels, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 10.7%. Since the same quarter one year prior, revenues slightly increased by 3.3%. 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.
  • Despite currently having a low debt-to-equity ratio of 0.36, 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 2.99 is very high and demonstrates very strong liquidity.
  • The gross profit margin for CISCO SYSTEMS INC is rather high; currently it is at 66.40%. Regardless of CSCO'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 11.00% trails the industry average.
  • CISCO SYSTEMS INC's earnings per share declined by 33.3% 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 year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, CISCO SYSTEMS INC reported lower earnings of $1.16 versus $1.32 in the prior year. This year, the market expects an improvement in earnings ($1.71 versus $1.16).

Cisco Systems, Inc. designs, manufactures, and sells Internet protocol (IP)-based networking and other products related to the communications and information technology industry worldwide. The company has a P/E ratio of 14.5, equal to the average computer hardware industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Cisco Systems has a market cap of $91.5 billion and is part of the technology sector and computer hardware industry. Shares are down 16% year to date as of the close of trading on Thursday.

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

Rating Change #4

Analogic Corporation ( ALOG) 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, good cash flow from operations, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • ALOG's revenue growth has slightly outpaced the industry average of 9.9%. Since the same quarter one year prior, revenues rose by 17.7%. 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.
  • ALOG has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.92, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has significantly increased by 555.51% to $26.01 million when compared to the same quarter last year. In addition, ANALOGIC CORP has also vastly surpassed the industry average cash flow growth rate of 0.92%.
  • ANALOGIC CORP's earnings per share declined by 18.2% 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, ANALOGIC CORP increased its bottom line by earning $1.33 versus $1.25 in the prior year. This year, the market expects an improvement in earnings ($2.27 versus $1.33).
  • 39.60% is the gross profit margin for ANALOGIC CORP which we consider to be strong. Regardless of ALOG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ALOG's net profit margin of 4.20% is significantly lower than the same period one year prior.

Analogic Corporation, a technology company, designs, manufactures, and sells medical imaging and security systems, and subsystems to original equipment manufacturers and end users primarily in the healthcare and airport security markets worldwide. The company has a P/E ratio of 37.6, above the average electronics industry P/E ratio of 35.2 and above the S&P 500 P/E ratio of 17.7. Analogic has a market cap of $626.4 million and is part of the technology sector and electronics industry. Shares are up 2% year to date as of the close of trading on Friday.

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

Rating Change #3

Fabrinet ( FN) has been upgraded by TheStreet Ratings from sell 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 notable return on equity. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from the ratings report include:
  • FN's revenue growth has slightly outpaced the industry average of 20.7%. Since the same quarter one year prior, revenues rose by 20.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • FN's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, FN has a quick ratio of 2.08, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly increased by 1034.69% to $16.68 million when compared to the same quarter last year. In addition, FABRINET has also vastly surpassed the industry average cash flow growth rate of -69.50%.
  • The gross profit margin for FABRINET is currently extremely low, coming in at 12.60%. Regardless of FN's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, FN's net profit margin of 8.70% compares favorably to the industry average.

Fabrinet provides precision optical, electro-mechanical, and electronic manufacturing services to original equipment manufacturers (OEMs) of complex products, such as optical communication components, modules and sub-systems, industrial lasers, and sensors. Fabrinet has a market cap of $679.4 million and is part of the consumer goods sector and consumer durables industry.

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

Rating Change #2

Independent Bank ( INDB) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, expanding profit margins and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • INDEPENDENT BANK CORP/MA has improved earnings per share by 36.8% 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, INDEPENDENT BANK CORP/MA increased its bottom line by earning $1.91 versus $0.89 in the prior year. This year, the market expects an improvement in earnings ($2.16 versus $1.91).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Commercial Banks industry average. The net income increased by 38.5% when compared to the same quarter one year prior, rising from $8.03 million to $11.12 million.
  • INDB's revenue growth trails the industry average of 19.9%. Since the same quarter one year prior, revenues slightly increased by 1.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for INDEPENDENT BANK CORP/MA is currently very high, coming in at 82.70%. It has increased significantly from the same period last year. Along with this, the net profit margin of 17.70% is above that of the industry average.
  • Net operating cash flow has significantly increased by 93.48% to -$0.59 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 55.10%.

Independent Bank Corp. operates as the bank holding company for Rockland Trust Company that provides commercial and retail banking, and wealth management services in Massachusetts. The company has a P/E ratio of 11.3, equal to the average banking industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Independent has a market cap of $513.2 million and is part of the financial sector and banking industry. Shares are down 7.2% year to date as of the close of trading on Thursday.

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

Rating Change #1

Retalix ( RTLX) 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, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 0.6%. Since the same quarter one year prior, revenues rose by 11.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • RTLX has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.86, which clearly demonstrates the ability to cover short-term cash needs.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • RETALIX LTD 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 year. We feel that this trend should continue. During the past fiscal year, RETALIX LTD increased its bottom line by earning $0.44 versus $0.30 in the prior year. This year, the market expects an improvement in earnings ($0.74 versus $0.44).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 83.2% when compared to the same quarter one year prior, rising from $1.56 million to $2.86 million.

Retalix Ltd. provides integrated software solutions to food and fuel retailers, grocery, convenience stores, and foodservice distributors primarily in Israel, the United States, and Europe. The company has a P/E ratio of 31.7, above the average computer software & services industry P/E ratio of 27.9 and above the S&P 500 P/E ratio of 17.7. Retalix has a market cap of $337.3 million and is part of the technology sector and computer software & services industry. Shares are up 1.3% year to date as of the close of trading on Thursday.

You can view the full Retalix 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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