NEW YORK ( TheStreet Ratings) -- Every trading day TheStreet Ratings' stock model reviews the investment ratings on around 4,700 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 53 U.S. common stocks for week ending December 23, 2011. 39 stocks were upgraded and 14 stocks were downgraded by our stock model.
Rating Change #10 Grand Canyon Education Inc ( LOPE) 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, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, weak operating cash flow and disappointing return on equity. Highlights from the ratings report include:
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- LOPE's revenue growth has slightly outpaced the industry average of 5.7%. Since the same quarter one year prior, revenues rose by 10.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The gross profit margin for GRAND CANYON EDUCATION INC is rather high; currently it is at 59.00%. 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 11.80% trails the industry average.
- LOPE's debt-to-equity ratio is very low at 0.16 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.71 is somewhat weak and could be cause for future problems.
- Net operating cash flow has decreased to $29.47 million or 41.54% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- LOPE has underperformed the S&P 500 Index, declining 18.93% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
Rating Change #9 Ship Finance International Ltd ( SFL) 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, generally weak debt management, disappointing return on equity and generally disappointing historical performance in the stock itself. Highlights from the ratings report include:
- SHIP FINANCE INTL LTD's earnings per share declined by 20.4% in the most recent quarter compared to 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, SHIP FINANCE INTL LTD reported lower earnings of $2.10 versus $2.55 in the prior year. For the next year, the market is expecting a contraction of 20.9% in earnings ($1.66 versus $2.10).
- 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 decreased by 20.7% when compared to the same quarter one year ago, dropping from $34.63 million to $27.45 million.
- The debt-to-equity ratio is very high at 2.41 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. To add to this, SFL has a quick ratio of 0.50, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- 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 Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, SHIP FINANCE INTL LTD has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- Looking at the price performance of SFL's shares over the past 12 months, there is not much good news to report: the stock is down 57.69%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier 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.
Rating Change #8 Cheniere Energy Inc ( LNG) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and weak operating cash flow. 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 32.9% when compared to the same quarter one year ago, falling from -$40.58 million to -$53.94 million.
- Net operating cash flow has significantly decreased to -$10.39 million or 215.82% 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 gross profit margin for CHENIERE ENERGY INC is currently very high, coming in at 80.50%. Regardless of LNG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LNG's net profit margin of -82.00% significantly underperformed when compared to the industry average.
- The revenue fell significantly faster than the industry average of 35.8%. Since the same quarter one year prior, revenues slightly dropped by 3.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- CHENIERE ENERGY INC has improved earnings per share by 8.2% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, CHENIERE ENERGY INC continued to lose money by earning -$2.02 versus -$3.19 in the prior year. For the next year, the market is expecting a contraction of 11.4% in earnings (-$2.25 versus -$2.02).
Rating Change #7 Ralcorp Holdings Incorporated ( RAH) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth 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 poor profit margins. Highlights from the ratings report include:
- RAH's revenue growth trails the industry average of 23.6%. Since the same quarter one year prior, revenues slightly increased by 8.3%. 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.
- Compared to its closing price of one year ago, RAH's share price has jumped by 32.28%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- The gross profit margin for RALCORP HOLDINGS INC is currently lower than what is desirable, coming in at 27.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -30.30% is significantly below that of 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 Food Products industry. The net income has significantly decreased by 983.3% when compared to the same quarter one year ago, falling from $41.90 million to -$370.10 million.
Rating Change #6 Delhaize Group SA ( DEG) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and poor profit margins. Highlights from the ratings report include:
- The revenue fell significantly faster than the industry average of 5.2%. Since the same quarter one year prior, revenues fell by 29.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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 & Staples Retailing industry. The net income has significantly decreased by 31.3% when compared to the same quarter one year ago, falling from $222.38 million to $152.77 million.
- 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 Food & Staples Retailing industry and the overall market, DELHAIZE GROUP - ETS DLHZ FR's return on equity is below that of both the industry average and the S&P 500.
Rating Change #5 Hancock Holding Company ( HBHC) 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 net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- HBHC's very impressive revenue growth greatly exceeded the industry average of 3.3%. Since the same quarter one year prior, revenues leaped by 117.8%. 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.
- The gross profit margin for HANCOCK HOLDING CO is currently very high, coming in at 88.60%. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, HBHC's net profit margin of 11.60% significantly trails the industry average.
- HANCOCK HOLDING CO's earnings per share declined by 10.0% 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, HANCOCK HOLDING CO reported lower earnings of $1.40 versus $2.23 in the prior year. This year, the market expects an improvement in earnings ($2.00 versus $1.40).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Commercial Banks industry average, but is greater than that of the S&P 500. The net income increased by 104.5% when compared to the same quarter one year prior, rising from $14.85 million to $30.38 million.
- 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 Commercial Banks industry and the overall market on the basis of return on equity, HANCOCK HOLDING CO underperformed against that of the industry average and is significantly less than that of the S&P 500.
Rating Change #4 Ingram Micro Inc ( IM) 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, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. 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 significantly trails the industry average of 45.3%. Since the same quarter one year prior, revenues slightly increased by 5.3%. 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.
- Net operating cash flow has increased to -$18.50 million or 48.64% when compared to the same quarter last year. In addition, INGRAM MICRO INC has also vastly surpassed the industry average cash flow growth rate of -56.81%.
- IM's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.95 is somewhat weak and could be cause for future problems.
- After a year of stock price fluctuations, the net result is that IM's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
Rating Change #3 Education Management Corporation ( EDMC) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and feeble growth in the company's earnings per share. Highlights from the ratings report include:
- Compared to its closing price of one year ago, EDMC's share price has jumped by 65.71%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- Despite its growing revenue, the company underperformed as compared with the industry average of 5.6%. Since the same quarter one year prior, revenues slightly increased by 2.4%. 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.
- 45.20% is the gross profit margin for EDUCATION MANAGEMENT CORP which we consider to be strong. Regardless of EDMC'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 4.00% trails 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 26.0% when compared to the same quarter one year ago, falling from $36.45 million to $26.95 million.
- Net operating cash flow has declined marginally to $221.31 million or 4.19% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, EDUCATION MANAGEMENT CORP has marginally lower results.
Rating Change #2 TELUS Corp ( TU) 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, notable return on equity, compelling growth in net income and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow. Highlights from the ratings report include:
- TU's revenue growth has slightly outpaced the industry average of 4.0%. Since the same quarter one year prior, revenues slightly increased by 6.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 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.
- 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 Diversified Telecommunication Services industry and the overall market, TELUS CORP's return on equity exceeds that of both the industry average and the S&P 500.
- 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 Diversified Telecommunication Services industry average. The net income increased by 32.1% when compared to the same quarter one year prior, rising from $246.00 million to $325.00 million.
- TELUS CORP has improved earnings per share by 31.6% 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. During the past fiscal year, TELUS CORP increased its bottom line by earning $3.22 versus $3.14 in the prior year.
Rating Change #1 Wells Fargo & Co ( WFC) 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, expanding profit margins, good cash flow from operations, notable return on equity and attractive valuation levels. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- WELLS FARGO & CO has improved earnings per share by 20.0% 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, WELLS FARGO & CO increased its bottom line by earning $2.21 versus $1.77 in the prior year. This year, the market expects an improvement in earnings ($2.81 versus $2.21).
- The gross profit margin for WELLS FARGO & CO is currently very high, coming in at 83.80%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, WFC's net profit margin of 19.10% significantly trails the industry average.
- Net operating cash flow has significantly increased by 55.19% to $9,228.00 million when compared to the same quarter last year. Despite an increase in cash flow of 55.19%, WELLS FARGO & CO is still growing at a significantly lower rate than the industry average of 1364.55%.
- 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, WELLS FARGO & CO has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.