TheStreet Ratings Top 10 Rating Changes

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 31 U.S. common stocks for week ending January 6, 2012. 26 stocks were upgraded and 5 stocks were downgraded by our stock model.

Rating Change #10

Saba Software Inc ( SABA) 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, disappointing return on equity, weak operating cash flow and feeble growth in its earnings per share.

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 Internet Software & Services industry. The net income has significantly decreased by 474.5% when compared to the same quarter one year ago, falling from -$0.80 million to -$4.57 million.
  • 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 Internet Software & Services industry and the overall market, SABA SOFTWARE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to -$4.41 million or 11.45% 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.
  • SABA SOFTWARE 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. 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, SABA SOFTWARE INC swung to a loss, reporting -$0.26 versus $0.10 in the prior year. This year, the market expects an improvement in earnings (-$0.20 versus -$0.26).
  • The gross profit margin for SABA SOFTWARE INC is rather high; currently it is at 63.70%. Regardless of SABA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SABA's net profit margin of -15.00% significantly underperformed when compared to the industry average.

Saba Software, Inc. provides a class of people systems that combine people learning, people performance, and people collaboration solutions. Saba Software has a market cap of $224 million and is part of the technology sector and computer software & services industry. Shares are down 6.1% year to date as of the close of trading on Friday.

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

Rating Change #9

Marcus Corporation ( MCS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself.

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 35.5% when compared to the same quarter one year prior, rising from $2.08 million to $2.82 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.3%. Since the same quarter one year prior, revenues slightly increased by 3.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • MARCUS CORP has improved earnings per share by 42.9% 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, MARCUS CORP reported lower earnings of $0.46 versus $0.54 in the prior year. This year, the market expects an improvement in earnings ($0.68 versus $0.46).
  • Net operating cash flow has decreased to $8.23 million or 24.70% 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.
  • 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. In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, MARCUS CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.

The Marcus Corporation, together with its subsidiaries, owns and operates theatres, and hotels and resorts. The company has a P/E ratio of 22.1, equal to the average media industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Marcus has a market cap of $257.3 million and is part of the services sector and media industry. Shares are down 5% year to date as of the close of trading on Wednesday.

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

Rating Change #8

Best Buy ( BBY) 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 deteriorating net income, poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • BBY's revenue growth has slightly outpaced the industry average of 3.9%. Since the same quarter one year prior, revenues slightly increased by 1.8%. 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.
  • BEST BUY CO INC's earnings per share declined by 22.2% 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, BEST BUY CO INC increased its bottom line by earning $3.12 versus $3.08 in the prior year. This year, the market expects an improvement in earnings ($3.40 versus $3.12).
  • The gross profit margin for BEST BUY CO INC is currently lower than what is desirable, coming in at 26.20%. 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.
  • 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 Specialty Retail industry. The net income has significantly decreased by 29.0% when compared to the same quarter one year ago, falling from $217.00 million to $154.00 million.

Best Buy Co., Inc. operates as a retailer of consumer electronics, home office products, entertainment products, appliances, and related services primarily in the United States, Europe, Canada, and China. The company has a P/E ratio of 8.1, below the average retail industry P/E ratio of 8.3 and below the S&P 500 P/E ratio of 17.7. Best Buy has a market cap of $8.47 billion and is part of the services sector and retail industry. Shares are up 1.3% year to date as of the close of trading on Wednesday.

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

Rating Change #7

Steelcase Inc ( SCS) 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, good cash flow from operations and compelling growth in net income. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • SCS's revenue growth has slightly outpaced the industry average of 1.6%. Since the same quarter one year prior, revenues slightly increased by 7.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • STEELCASE INC has improved earnings per share by 21.4% 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. During the past fiscal year, STEELCASE INC turned its bottom line around by earning $0.16 versus -$0.10 in the prior year. This year, the market expects an improvement in earnings ($0.61 versus $0.16).
  • Net operating cash flow has slightly increased to $51.00 million or 5.59% when compared to the same quarter last year. In addition, STEELCASE INC has also modestly surpassed the industry average cash flow growth rate of 2.29%.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Commercial Services & Supplies industry average. The net income increased by 22.4% when compared to the same quarter one year prior, going from $18.30 million to $22.40 million.

Steelcase Inc. designs, manufactures, and distributes furniture systems and seating products, user-centered technologies, and interior architectural products primarily in North America, Europe, and Asia. The company has a P/E ratio of 19.1, above the average consumer durables industry P/E ratio of 18.7 and above the S&P 500 P/E ratio of 17.7. Steelcase has a market cap of $653.5 million and is part of the consumer goods sector and consumer durables industry. Shares are up 3.2% year to date as of the close of trading on Wednesday.

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

Rating Change #6

PacWest Bancorp ( PACW) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, expanding profit margins, good cash flow from operations, impressive record of earnings per share growth 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 280.1% when compared to the same quarter one year prior, rising from $3.50 million to $13.30 million.
  • The gross profit margin for PACWEST BANCORP is currently very high, coming in at 89.40%. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, PACW's net profit margin of 16.70% significantly trails the industry average.
  • Net operating cash flow has significantly increased by 97.36% to $59.61 million when compared to the same quarter last year. Despite an increase in cash flow of 97.36%, PACWEST BANCORP is still growing at a significantly lower rate than the industry average of 1651.58%.
  • PACWEST BANCORP 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, PACWEST BANCORP reported poor results of -$1.81 versus -$0.29 in the prior year. This year, the market expects an improvement in earnings ($1.40 versus -$1.81).
  • PACW, with its decline in revenue, slightly underperformed the industry average of 3.1%. Since the same quarter one year prior, revenues slightly dropped by 6.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

PacWest Bancorp operates as the bank holding company for Pacific Western Bank that provides commercial banking products and services to small to medium size businesses, the owners and employees of those businesses, and households primarily in Southern California. The company has a P/E ratio of 24.6, above the average banking industry P/E ratio of 24.3 and above the S&P 500 P/E ratio of 17.7. PacWest has a market cap of $672.6 million and is part of the financial sector and banking industry. Shares are down 11.4% year to date as of the close of trading on Wednesday.

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

Rating Change #5

Worthington Industries ( WOR) 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, notable return on equity, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and compelling growth in net income. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • WORTHINGTON INDUSTRIES has improved earnings per share by 35.0% 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 year. We feel that this trend should continue. During the past fiscal year, WORTHINGTON INDUSTRIES increased its bottom line by earning $1.55 versus $0.57 in the prior year. This year, the market expects an improvement in earnings ($1.60 versus $1.55).
  • 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 Metals & Mining industry and the overall market, WORTHINGTON INDUSTRIES's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has slightly increased to $64.36 million or 8.23% when compared to the same quarter last year. Despite an increase in cash flow of 8.23%, WORTHINGTON INDUSTRIES is still growing at a significantly lower rate than the industry average of 71.43%.
  • The revenue fell significantly faster than the industry average of 72.9%. Since the same quarter one year prior, revenues slightly dropped by 1.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • WOR's debt-to-equity ratio of 0.71 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. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.82 is weak.

Worthington Industries, Inc. operates as a diversified metals processing company focusing on steel processing and manufactured metal products in the United States, Canada, and Europe. The company has a P/E ratio of 11.1, above the average metals & mining industry P/E ratio of 11 and below the S&P 500 P/E ratio of 17.7. Worthington has a market cap of $1.24 billion and is part of the basic materials sector and metals & mining industry. Shares are up 7.7% year to date as of the close of trading on Friday.

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

Rating Change #4

UMB Financial Corporation ( UMBF) 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, growth in earnings per share, 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:
  • UMBF's revenue growth has slightly outpaced the industry average of 3.2%. Since the same quarter one year prior, revenues slightly increased by 5.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • UMB FINANCIAL CORP has improved earnings per share by 12.3% 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, UMB FINANCIAL CORP increased its bottom line by earning $2.26 versus $2.20 in the prior year. This year, the market expects an improvement in earnings ($2.66 versus $2.26).
  • The gross profit margin for UMB FINANCIAL CORP is currently very high, coming in at 94.10%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, UMBF's net profit margin of 13.90% significantly trails the industry average.
  • The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Commercial Banks industry average. The net income increased by 14.2% when compared to the same quarter one year prior, going from $22.77 million to $26.02 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 Commercial Banks industry and the overall market, UMB FINANCIAL CORP's return on equity is below that of both the industry average and the S&P 500.

UMB Financial Corporation, a multi-bank holding company, provides banking and other financial services to commercial, retail, government, and correspondent bank customers. The company has a P/E ratio of 15.1, below the average banking industry P/E ratio of 15.2 and below the S&P 500 P/E ratio of 17.7. UMB Financial has a market cap of $1.55 billion and is part of the financial sector and banking industry. Shares are up 5.8% year to date as of the close of trading on Friday.

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

Rating Change #3

Apollo Group Inc ( APOL) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, notable return on equity, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 328.12% and other important driving factors, this stock has surged by 38.21% 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, APOL should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Consumer Services industry. The net income increased by 360.4% when compared to the same quarter one year prior, rising from $40.97 million to $188.61 million.
  • 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. In comparison to other companies in the Diversified Consumer Services industry and the overall market on the basis of return on equity, APOLLO GROUP INC has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • The gross profit margin for APOLLO GROUP INC is rather high; currently it is at 60.90%. Regardless of APOL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, APOL's net profit margin of 16.80% compares favorably to the industry average.
  • APOLLO GROUP INC 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, APOLLO GROUP INC increased its bottom line by earning $4.02 versus $3.69 in the prior year. For the next year, the market is expecting a contraction of 14.9% in earnings ($3.42 versus $4.02).

Apollo Group, Inc., through its subsidiaries, provides online and on-campus educational programs and services at the undergraduate, master's, and doctoral levels. The company has a P/E ratio of 13.2, equal to the average diversified services industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Apollo Group has a market cap of $6.72 billion and is part of the services sector and diversified services industry. Shares are up 0.4% year to date as of the close of trading on Thursday.

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

Rating Change #2

Adobe Systems Inc ( ADBE) 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, reasonable valuation levels 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 2.6%. Since the same quarter one year prior, revenues rose by 14.3%. 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.
  • Although ADBE's debt-to-equity ratio of 0.26 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 2.84, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for ADOBE SYSTEMS INC is currently very high, coming in at 95.20%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, ADBE's net profit margin of 15.10% significantly trails the industry average.
  • ADOBE SYSTEMS INC's earnings per share declined by 34.0% 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, ADOBE SYSTEMS INC increased its bottom line by earning $1.65 versus $1.49 in the prior year. This year, the market expects an improvement in earnings ($2.43 versus $1.65).

Adobe Systems Incorporated operates as a diversified software company in the Americas, Europe, the Middle East, Africa, and Asia. The company has a P/E ratio of 17.1, equal to the average computer software & services industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Adobe Systems has a market cap of $13.88 billion and is part of the technology sector and computer software & services industry. Shares are up 0.7% year to date as of the close of trading on Friday.

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

Rating Change #1

Equity Residential ( EQR) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, solid stock price performance, impressive record of earnings per share growth and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 274.7% when compared to the same quarter one year prior, rising from $28.78 million to $107.85 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 18.4%. Since the same quarter one year prior, revenues rose by 13.8%. 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. 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.
  • EQUITY RESIDENTIAL 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, EQUITY RESIDENTIAL reported poor results of -$0.26 versus -$0.02 in the prior year. This year, the market expects an improvement in earnings ($2.77 versus -$0.26).
  • Net operating cash flow has slightly increased to $221.57 million or 7.57% when compared to the same quarter last year. Despite an increase in cash flow, EQUITY RESIDENTIAL's cash flow growth rate is still lower than the industry average growth rate of 38.64%.

Equity Residential, a real estate investment trust (REIT), engages in the acquisition, development, and management of multifamily properties in the United States. The company has a P/E ratio of 350.9, above the S&P 500 P/E ratio of 17.7. Equity has a market cap of $16.66 billion and is part of the financial sector and real estate industry. Shares are down 1.2% year to date as of the close of trading on Friday.

You can view the full Equity 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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