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 34 U.S. common stocks for week ending September 21, 2012. 23 stocks were upgraded and 11 stocks were downgraded by our stock model.

Rating Change #10

L.S. Starrett Company ( SCX) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

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Highlights from the ratings report include:
  • SCX's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, SCX has a quick ratio of 2.20, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has slightly increased to $7.33 million or 4.31% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -36.67%.
  • SCX, with its decline in revenue, underperformed when compared the industry average of 10.2%. Since the same quarter one year prior, revenues slightly dropped by 1.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 Machinery industry and the overall market, STARRETT (L.S.) CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for STARRETT (L.S.) CO is rather low; currently it is at 22.20%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -6.60% is significantly below that of the industry average.

The L.S. Starrett Company engages in the manufacture and sale of industrial, professional, and consumer measuring and cutting tools and related products primarily in North America, Brazil, and the United Kingdom. The company has a P/E ratio of 99, above the average industrial industry P/E ratio of 10.2 and above the S&P 500 P/E ratio of 17.7. L.S. Starrett has a market cap of $77.4 million and is part of the industrial goods sector and industrial industry. Shares are down 0.8% year to date as of the close of trading on Tuesday.

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

Rating Change #9

KVH Industries Inc ( KVHI) 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, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

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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 Communications Equipment industry. The net income increased by 138.4% when compared to the same quarter one year prior, rising from $0.19 million to $0.45 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 14.0%. Since the same quarter one year prior, revenues slightly increased by 4.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • KVH INDUSTRIES INC 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, KVH INDUSTRIES INC reported lower earnings of $0.06 versus $0.56 in the prior year. This year, the market expects an improvement in earnings ($0.23 versus $0.06).
  • Powered by its strong earnings growth of 200.00% and other important driving factors, this stock has surged by 63.38% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
  • 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 Communications Equipment industry and the overall market, KVH INDUSTRIES INC's return on equity significantly trails that of both the industry average and the S&P 500.

KVH Industries, Inc. engages in the design, development, manufacture, and marketing of mobile communication products for the marine, land mobile, and aeronautical markets primarily in the Americas, Europe, and Asia. The company has a P/E ratio of 143.2, equal to the average telecommunications industry P/E ratio and above the S&P 500 P/E ratio of 17.7. KVH has a market cap of $191.1 million and is part of the technology sector and telecommunications industry. Shares are up 65.7% year to date as of the close of trading on Friday.

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

Rating Change #8

GSI Group Inc ( GSIG) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. 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 unimpressive growth in net income.

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Highlights from the ratings report include:
  • GSIG's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, GSIG has a quick ratio of 1.97, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 47.50% is the gross profit margin for GSI GROUP INC which we consider to be strong. Regardless of GSIG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GSIG's net profit margin of 6.90% compares favorably to the industry average.
  • GSI GROUP INC's earnings per share declined by 38.1% 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, GSI GROUP INC increased its bottom line by earning $0.72 versus $0.01 in the prior year.
  • The share price of GSI GROUP INC has not done very well: it is down 5.55% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.
  • Net operating cash flow has decreased to $9.76 million or 20.49% 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.

GSI Group Inc. designs, develops, manufactures, and sells laser-based solutions, laser scanning devices, and precision motion and optical control technologies worldwide. The company has a P/E ratio of 13.2, below the average electronics industry P/E ratio of 16.1 and below the S&P 500 P/E ratio of 17.7. GSI Group has a market cap of $298.9 million and is part of the technology sector and electronics industry. Shares are down 13.3% year to date as of the close of trading on Friday.

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

Rating Change #7

Fortegra Financial Corp ( FRF) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been poor profit margins.

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Highlights from the ratings report include:
  • The gross profit margin for FORTEGRA FINANCIAL CORP is rather low; currently it is at 16.90%. Regardless of FRF's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 6.80% trails the industry average.
  • FRF's debt-to-equity ratio of 0.81 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.
  • 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 Insurance industry and the overall market on the basis of return on equity, FORTEGRA FINANCIAL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Net operating cash flow has significantly increased by 597.05% to $17.58 million when compared to the same quarter last year. In addition, FORTEGRA FINANCIAL CORP has also vastly surpassed the industry average cash flow growth rate of -25.01%.

Fortegra Financial Corporation, an insurance services company, provides distribution and administration services primarily in the United States. The company has a P/E ratio of 10.1, below the average insurance industry P/E ratio of 10.4 and below the S&P 500 P/E ratio of 17.7. Fortegra Financial has a market cap of $161.6 million and is part of the financial sector and insurance industry. Shares are up 20.2% year to date as of the close of trading on Friday.

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

Rating Change #6

Energy Company Of Parana ( ELP) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, attractive valuation levels 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.

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Highlights from the ratings report include:
  • ELP's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, ELP has a quick ratio of 1.54, which demonstrates the ability of the company to cover short-term liquidity needs.
  • ELP, with its decline in revenue, underperformed when compared the industry average of 1.8%. Since the same quarter one year prior, revenues fell by 26.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for COPEL-CIA PARANAENSE ENERGIA is rather low; currently it is at 17.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 8.00% trails that of the industry average.
  • 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 Electric Utilities industry and the overall market, COPEL-CIA PARANAENSE ENERGIA's return on equity is below that of both the industry average and the S&P 500.

Companhia Paranaense de Energia Copel engages in the generation, transmission, distribution, and sale of electricity primarily to industrial, residential, commercial, and rural customers primarily in the state of Parana, Brazil. The company has a P/E ratio of 19.8, above the average utilities industry P/E ratio of 7.5 and above the S&P 500 P/E ratio of 17.7. Energy Company of Parana has a market cap of $4.43 billion and is part of the utilities sector and utilities industry. Shares are down 21.3% year to date as of the close of trading on Wednesday.

You can view the full Energy Company of Parana Ratings Report or get investment ideas from our investment research center.

Rating Change #5

A.M. Castle & Co ( CAS) 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, good cash flow from operations and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

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Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 14.5%. Since the same quarter one year prior, revenues rose by 16.6%. 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 significantly increased by 172.54% to $18.73 million when compared to the same quarter last year. In addition, CASTLE (A M) & CO has also vastly surpassed the industry average cash flow growth rate of -27.00%.
  • 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. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • 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 Metals & Mining industry and the overall market, CASTLE (A M) & CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • 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 Metals & Mining industry. The net income has significantly decreased by 180.6% when compared to the same quarter one year ago, falling from $3.70 million to -$2.98 million.

A.M. Castle & Co., together with its subsidiaries, engages in the distribution of specialty metals and plastics worldwide. The company operates in two segments, Metals and Plastics. A.M. Castle has a market cap of $295.1 million and is part of the industrial goods sector and industrial industry. Shares are up 33.7% year to date as of the close of trading on Wednesday.

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

Rating Change #4

ConAgra Foods Inc ( CAG) 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, increase in stock price during the past year, attractive valuation levels, increase in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

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Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.7%. Since the same quarter one year prior, revenues slightly increased by 7.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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. 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.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food Products industry. The net income increased by 193.2% when compared to the same quarter one year prior, rising from $85.30 million to $250.10 million.
  • Net operating cash flow has slightly increased to $323.90 million or 2.79% when compared to the same quarter last year. Despite an increase in cash flow, CONAGRA FOODS INC's average is still marginally south of the industry average growth rate of 11.84%.

ConAgra Foods, Inc. operates as a food company primarily in North America. The company operates through two segments, Consumer Foods and Commercial Foods. The company has a P/E ratio of 22.9, equal to the average food & beverage industry P/E ratio and above the S&P 500 P/E ratio of 17.7. ConAgra has a market cap of $10.42 billion and is part of the consumer goods sector and food & beverage industry. Shares are down 2.8% year to date as of the close of trading on Friday.

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

Rating Change #3

Apogee Enterprises ( APOG) 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. We feel these strengths outweigh the fact that the company shows low profit margins.

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Highlights from the ratings report include:
  • APOG's revenue growth has slightly outpaced the industry average of 2.5%. Since the same quarter one year prior, revenues slightly increased by 6.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • APOG's debt-to-equity ratio is very low at 0.10 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • Powered by its strong earnings growth of 383.33% and other important driving factors, this stock has surged by 98.87% 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, APOG should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • APOGEE ENTERPRISES 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 year. We feel that this trend should continue. During the past fiscal year, APOGEE ENTERPRISES INC turned its bottom line around by earning $0.17 versus -$0.51 in the prior year. This year, the market expects an improvement in earnings ($0.55 versus $0.17).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Building Products industry. The net income increased by 401.6% when compared to the same quarter one year prior, rising from -$1.68 million to $5.06 million.

Apogee Enterprises, Inc., together with its subsidiaries, engages in the design and development of glass products, services, and systems primarily in North America, Europe, and Brazil. The company has a P/E ratio of 55.5, equal to the average materials & construction industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Apogee has a market cap of $487.5 million and is part of the industrial goods sector and materials & construction industry. Shares are up 40.3% year to date as of the close of trading on Thursday.

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

Rating Change #2

A.H. Belo Corporation ( AHC) has been upgraded by TheStreet Ratings from sell to hold. 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 and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins.

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Highlights from the ratings report include:
  • AHC 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 the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.33, which illustrates the ability to avoid short-term cash problems.
  • A. H. BELO 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. This trend suggests that the performance of the business is improving. During the past fiscal year, A. H. BELO CORP continued to lose money by earning -$0.52 versus -$5.90 in the prior year. This year, the market expects an improvement in earnings ($0.03 versus -$0.52).
  • AHC, with its decline in revenue, underperformed when compared the industry average of 10.3%. Since the same quarter one year prior, revenues slightly dropped by 4.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for A. H. BELO CORP is currently extremely low, coming in at 8.80%. Regardless of AHC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.20% trails the industry average.
  • Net operating cash flow has significantly decreased to -$10.85 million or 912.05% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

A. H. Belo Corporation operates as a newspaper publishing, and local news and information company primarily in the United States. It owns and operates four metropolitan daily newspapers and associated Web sites. A.H. Belo has a market cap of $92.6 million and is part of the services sector and media industry. Shares are down 0.2% year to date as of the close of trading on Tuesday.

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

Rating Change #1

Arbor Realty Trust Inc ( ABR) 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, compelling growth in net income and revenue growth. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

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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 250.1% when compared to the same quarter one year prior, rising from -$10.36 million to $15.55 million.
  • ABR's revenue growth trails the industry average of 18.7%. Since the same quarter one year prior, revenues slightly increased by 6.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ARBOR REALTY TRUST INC 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, ARBOR REALTY TRUST INC swung to a loss, reporting -$1.53 versus $4.43 in the prior year.
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market, ARBOR REALTY TRUST INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ARBOR REALTY TRUST INC is currently extremely low, coming in at 13.70%. It has decreased from the same quarter the previous year. Despite the weak results of the gross profit margin, the net profit margin of 55.60% has significantly outperformed against the industry average.

Arbor Realty Trust, Inc. operates as a real estate investment trust (REIT). Arbor has a market cap of $178.7 million and is part of the financial sector and real estate industry. Shares are up 80.4% year to date as of the close of trading on Wednesday.

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

-- Reported by Kevin Baker in Palm Beach Gardens, 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.

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model
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.