3 Stocks With Upgrades: WHR, PPS, PFCB

NEW YORK ( TheStreet) -- These stocks were upgraded to buy by TheStreet Ratings on Wednesday: Whirlpool ( WHR), Post Properties ( PPS) and P.F. Chang's China Bistro ( PFCB).

Whirlpool

The home appliances manufacturer reported last week fourth-quarter earnings of $205 million, or $2.62 a share, an increase from year-earlier earnings of $171 million, or $2.19 a share.

Shares of the company sold off at the end of December when retailer Sears ( SHLD) announced declining holiday sales and that it would be closing up to 120 Kmart and Sears stores.

The stock fell about 47% in 2011 and has risen 49% year to date. Whirlpool is benefiting from an improving economy.

"Whirlpool expects to generate $100M-$150M of FCF (before dividends) as cashsources are projected to exceed cash uses of $914M. Including dividends ($148M inFY11), we see FY12 FCF flat to slightly negative, making it likely that the Companywill refinance its $350M May 2012 notes," Bank of America Merrill Lynch analysts wrote in a Feb. 7 report. "Leverage at 1.7x total debt/EBITDA earnings before interest, taxes, depreciation and amortization is low relative to its low-BBB credit rating and incremental debt issuance should not result in negative ratings actions. An upgrade to WHR's mid-BBB target in FY12 would require a significant improvement in industry outlook and solid top-line and EBITDA growth, which we think is unlikely given the macroeconomic backdrop."

Whirlpool was upgraded to a buy from a from a hold by TheStreet Ratings.

Of the seven analysts who cover the company, three rated it a buy. Two analysts considered the company a hold and two considered it a sell.

Whirlpool has an estimated price-to-earnings ratio for next year of 9.42; the average for durable household product companies is 11.34. For comparison, Tupperware ( TUP) has a forward P/E of 11.06 and Lifetime Brands ( LCUT) has a forward P/E of 6.66.

TheStreet Ratings gives Whirlpool a B- grade with a $81.70 price target. The stock closed Tuesday at $70.70.

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Post Properties

The real estate investment trust reported on Monday fourth-quarter earnings of $3 million, or 6 cents a share. Year-earlier earnings were $2.4 million, or 5 cents a share.

"PPS stock trades at a premium to peers on a dividend and cap rate basis, and we believe its current valuation has upside to the $47 level, based on higher estimated 2012 FFO," Wunderlich Securities analysts wrote in a report on Wednesday.

Post Properties was upgraded to a buy from a hold by TheStreet Ratings.

Of the 19 analysts who cover the company, 10 rated it a hold. Eight analysts gave it a buy rating and one considered it a sell.

Shares of Post Properties reached a 52-week high of $46.26 on Monday.

Post Properties has a forward P/E of 44.88; the average for residential REITs is 67.97. For comparison, Avalonbay Communities ( AVB) has a forward P/E of 42.57.

TheStreet Ratings gives Post Properties a B- grade with a $60.07 price target. The stock closed Tuesday at $45.47 and has increased 4% year to date.


P.F. Chang's China Bistro

The restaurant company is scheduled to report fourth-quarter results on Feb. 16. Analysts, on average, anticipate earnings of 45 cents a share on revenue of $308.25 million.

"At the time of PFCB's investor day in mid November, we believed thatSSS remained negative for both brands in the low to mid single-digit range. However, we believe that SSS likely improved in 2H of the quarter given weather favorability particularly in the Company's two largest markets of CA and TX and also in the Northeast," Sterne Agee analysts wrote in a report on Monday. "In terms of outlook for 1Q, the Company initiated a bounce-back promotion on January 23. When we studied the result of a similar program initiated by California Pizza Kitchen (privately held) in 2008, 2009 and 2010, we found a predictable and meaningful boost to SSS from this program. We also believe that the program rolled out by CPK was extremely profitable."

P.F. Chang's was upgraded to a buy from a hold by TheStreet Ratings.

Of the 23 analysts who cover P.F. Chang's, 12 rated it a hold. Eight analysts gave it a buy rating and three gave it a sell.

P.F. Chang's has a forward P/E of 22.09; the average for restaurants and bar companies is 23.44. For comparison, Buffalo Wild Wings ( BWLD) and Cracker Barrel ( CBRL) have lower forward P/Es of 17.99 and 11.46, respectively.

TheStreet Ratings gives P.F. Chang's a B- grade and $39.74 price target. The stock closed Tuesday at $35.21 and has increased 13.91% year to date.

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-- Written by Alexandra Zendrian

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