TheStreet Ratings Top 10 Rating Changes

NEW YORK ( TheStreet Ratings) -- Every trading day TheStreet Ratings' stock model reviews the investment ratings on around 4,600 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 43 U.S. common stocks for week ending October 19, 2012. 19 stocks were upgraded and 24 stocks were downgraded by our stock model.

Rating Change #10

Morgan Stanley ( MS) has been downgraded by TheStreet Ratings from buy to hold. The company's strongest point has been its very decent return on equity which we feel should persist. At the same time, however, we also find weaknesses including feeble growth in the company's earnings per share and deteriorating net income.

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Highlights from the ratings report include:
  • 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. 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 revenue fell significantly faster than the industry average of 6.9%. Since the same quarter one year prior, revenues fell by 40.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 Capital Markets industry and the overall market on the basis of return on equity, MORGAN STANLEY underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • MORGAN STANLEY 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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, MORGAN STANLEY reported lower earnings of $1.16 versus $2.33 in the prior year. For the next year, the market is expecting a contraction of 23.7% in earnings ($0.89 versus $1.16).
  • 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 Capital Markets industry. The net income has significantly decreased by 146.5% when compared to the same quarter one year ago, falling from $2,199.00 million to -$1,023.00 million.
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Morgan Stanley, a financial holding company, provides various financial products and services to corporations, governments, financial institutions, and individuals worldwide. The company has a P/E ratio of 13.9, below the average financial services industry P/E ratio of 15.9 and below the S&P 500 P/E ratio of 17.7. Morgan Stanley has a market cap of $36.53 billion and is part of the financial sector and financial services industry. Shares are up 17.6% year to date as of the close of trading on Friday.

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

Rating Change #9

Tyco International Ltd ( TYC) 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, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

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Highlights from the ratings report include:
  • TYC's revenue growth has slightly outpaced the industry average of 3.0%. Since the same quarter one year prior, revenues slightly increased by 3.9%. 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 slightly increased to $776.00 million or 9.60% when compared to the same quarter last year. Despite an increase in cash flow, TYCO INTERNATIONAL LTD's cash flow growth rate is still lower than the industry average growth rate of 20.03%.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Commercial Services & Supplies industry. The net income has significantly decreased by 32.6% when compared to the same quarter one year ago, falling from $359.00 million to $242.00 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 Services & Supplies industry and the overall market, TYCO INTERNATIONAL LTD's return on equity is below that of both the industry average and the S&P 500.
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Tyco International Ltd. provides security products and services, fire protection and detection products and services, valves and controls, and other industrial products worldwide. It operates through three segments: Tyco Security Solutions, Tyco Fire Protection, and Tyco Flow Control. The company has a P/E ratio of 9.8, equal to the average diversified services industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Tyco International has a market cap of $12.6 billion and is part of the services sector and diversified services industry. Shares are down 10.9% year to date as of the close of trading on Wednesday.

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

Rating Change #8

Regions Financial Corporation ( RF) has been downgraded by TheStreet Ratings from buy 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 expanding profit margins. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

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Highlights from the ratings report include:
  • REGIONS FINANCIAL 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, REGIONS FINANCIAL CORP continued to lose money by earning -$0.02 versus -$0.63 in the prior year. This year, the market expects an improvement in earnings ($0.74 versus -$0.02).
  • 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 225.7% when compared to the same quarter one year prior, rising from $109.00 million to $355.00 million.
  • Despite the weak revenue results, RF has outperformed against the industry average of 18.2%. Since the same quarter one year prior, revenues slightly dropped by 7.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Powered by its strong earnings growth of 900.00% and other important driving factors, this stock has surged by 88.38% 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.
  • Net operating cash flow has significantly decreased to $282.00 million or 81.32% 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.
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Regions Financial Corporation operates as the holding company for Regions Bank that provides a range of commercial, retail, and mortgage banking services in the United States. The company has a P/E ratio of 23.9, above the S&P 500 P/E ratio of 17.7. Regions Financial has a market cap of $10.15 billion and is part of the financial sector and banking industry. Shares are up 67.8% year to date as of the close of trading on Friday.

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

Rating Change #7

Noble Corporation ( NE) 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, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and feeble growth in the company's earnings per share.

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Highlights from the ratings report include:
  • NE's revenue growth has slightly outpaced the industry average of 12.6%. Since the same quarter one year prior, revenues rose by 19.8%. 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.
  • Net operating cash flow has significantly increased by 72.64% to $395.56 million when compared to the same quarter last year. In addition, NOBLE CORP has also vastly surpassed the industry average cash flow growth rate of -48.14%.
  • 45.40% is the gross profit margin for NOBLE CORP which we consider to be strong. Regardless of NE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NE's net profit margin of 13.00% compares favorably to the industry average.
  • NOBLE CORP's earnings per share declined by 15.1% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, NOBLE CORP reported lower earnings of $1.45 versus $3.01 in the prior year. This year, the market expects an improvement in earnings ($2.35 versus $1.45).
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Energy Equipment & Services industry average. The net income has decreased by 15.2% when compared to the same quarter one year ago, dropping from $135.32 million to $114.77 million.
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Noble Corporation operates as an offshore drilling contractor for the oil and gas industry. The company offers contract drilling services for oil and gas wells. The company has a P/E ratio of 17.7, equal to the average energy industry P/E ratio and equal to the S&P 500 P/E ratio of 17.7. Noble has a market cap of $9.55 billion and is part of the basic materials sector and energy industry. Shares are up 24.7% year to date as of the close of trading on Thursday.

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

Rating Change #6

Steel Dynamics Inc ( STLD) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures 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 weak operating cash flow.

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Highlights from the ratings report include:
  • 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. 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 against the S&P 500 and did not exceed that of the Metals & Mining industry. The net income has significantly decreased by 70.4% when compared to the same quarter one year ago, falling from $43.30 million to $12.83 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. When compared to other companies in the Metals & Mining industry and the overall market, STEEL DYNAMICS INC's return on equity is below that of both the industry average and the S&P 500.
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Steel Dynamics, Inc., together with its subsidiaries, engages in the manufacture and sale of steel products in the United States and internationally. The company operates in three segments: Steel Operations, Metals Recycling and Ferrous Resources Operations, and Steel Fabrication Operations. The company has a P/E ratio of 16.2, below the average metals & mining industry P/E ratio of 17.3 and below the S&P 500 P/E ratio of 17.7. Steel Dynamics has a market cap of $2.77 billion and is part of the basic materials sector and metals & mining industry. Shares are down 4% year to date as of the close of trading on Thursday.

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

Rating Change #5

Turkcell Iletisim Hizmetleri AS ( TKC) 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, notable return on equity, solid stock price performance and increase 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.

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Highlights from the ratings report include:
  • TKC's revenue growth has slightly outpaced the industry average of 1.7%. Since the same quarter one year prior, revenues slightly increased by 3.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • TKC's debt-to-equity ratio is very low at 0.09 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • 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 Wireless Telecommunication Services industry and the overall market, TURKCELL ILETISIM HIZMET's return on equity exceeds that of both the industry average and the S&P 500.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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 net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Wireless Telecommunication Services industry average. The net income increased by 1.1% when compared to the same quarter one year prior, going from $313.58 million to $316.90 million.
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Turkcell Iletisim Hizmetleri A.S. engages in establishing and operating a global system for mobile communications network in Turkey. The company has a P/E ratio of 17.8, above the average telecommunications industry P/E ratio of 11.7 and above the S&P 500 P/E ratio of 17.7. Turkcell Iletisim Hizmetleri AS has a market cap of $13.35 billion and is part of the technology sector and telecommunications industry. Shares are up 29.2% year to date as of the close of trading on Friday.

You can view the full Turkcell Iletisim Hizmetleri AS Ratings Report or get investment ideas from our investment research center.

Rating Change #4

USG Corp ( USG) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, generally higher debt management risk and poor profit margins.

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Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.8%. Since the same quarter one year prior, revenues slightly increased by 8.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 73.87% and other important driving factors, this stock has surged by 197.22% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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 debt-to-equity ratio is very high at 21.20 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, USG has managed to keep a strong quick ratio of 1.61, which demonstrates the ability to cover short-term cash needs.
  • 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 Building Products industry and the overall market, USG CORP's return on equity significantly trails that of both the industry average and the S&P 500.
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USG Corporation, through its subsidiaries, engages in the manufacture and distribution of building materials worldwide. USG has a market cap of $2.44 billion and is part of the industrial goods sector and materials & construction industry. Shares are up 142.8% year to date as of the close of trading on Friday.

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

Rating Change #3

South Jersey Industries ( SJI) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, notable return on equity and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

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Highlights from the ratings report include:
  • SOUTH JERSEY INDUSTRIES 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. We feel that this trend should continue. During the past fiscal year, SOUTH JERSEY INDUSTRIES INC increased its bottom line by earning $2.99 versus $2.26 in the prior year. This year, the market expects an improvement in earnings ($3.06 versus $2.99).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Gas Utilities industry. The net income increased by 70.0% when compared to the same quarter one year prior, rising from $6.08 million to $10.33 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. Compared to other companies in the Gas Utilities industry and the overall market, SOUTH JERSEY INDUSTRIES INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 451.61% to $14.05 million when compared to the same quarter last year. In addition, SOUTH JERSEY INDUSTRIES INC has also vastly surpassed the industry average cash flow growth rate of 42.32%.
  • SJI, with its decline in revenue, underperformed when compared the industry average of 8.8%. Since the same quarter one year prior, revenues fell by 24.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
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South Jersey Industries, Inc., through its subsidiaries, engages in the purchase, transmission, and sale of natural gas for residential, commercial, and industrial customers. The company has a P/E ratio of 16.2, equal to the average utilities industry P/E ratio and below the S&P 500 P/E ratio of 17.7. South Jersey has a market cap of $1.59 billion and is part of the utilities sector and utilities industry. Shares are down 9.9% year to date as of the close of trading on Tuesday.

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

Rating Change #2

Cathay General Bancorp ( CATY) 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, expanding profit margins, solid stock price performance and notable return on equity. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

  • ACTIVE STOCK TRADERS: Get full access to Jim Cramer's thoughts for less than $3/week - sometimes before he says them on TV! Start with a 14-Day Free Trial.

Highlights from the ratings report include:
  • CATHAY GENERAL BANCORP has improved earnings per share by 17.9% 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, CATHAY GENERAL BANCORP turned its bottom line around by earning $1.07 versus -$0.09 in the prior year. This year, the market expects an improvement in earnings ($1.30 versus $1.07).
  • 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 16.4% when compared to the same quarter one year prior, going from $26.08 million to $30.36 million.
  • The gross profit margin for CATHAY GENERAL BANCORP is currently very high, coming in at 78.50%. It has increased significantly from the same period last year. Along with this, the net profit margin of 24.80% is above that of the industry average.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 29.55% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • Despite the weak revenue results, CATY has outperformed against the industry average of 17.1%. Since the same quarter one year prior, revenues slightly dropped by 6.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
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Cathay General Bancorp operates as the holding company for Cathay Bank, which offers various commercial banking products and services for individuals, professionals, and small to medium-sized businesses in the United States. The company has a P/E ratio of 14.1, above the average banking industry P/E ratio of 13.9 and below the S&P 500 P/E ratio of 17.7. Cathay General has a market cap of $1.35 billion and is part of the financial sector and banking industry. Shares are up 13.3% year to date as of the close of trading on Wednesday.

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

Rating Change #1

Universal Corporation ( UVV) 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, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins.

  • ACTIVE STOCK TRADERS: Get full access to Jim Cramer's thoughts for less than $3/week - sometimes before he says them on TV! Start with a 14-Day Free Trial.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 55.76% and other important driving factors, this stock has surged by 29.10% 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, UVV 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 Tobacco industry. The net income increased by 45.5% when compared to the same quarter one year prior, rising from $15.89 million to $23.13 million.
  • The current debt-to-equity ratio, 0.47, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.14, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has significantly increased by 60.11% to -$57.94 million when compared to the same quarter last year. In addition, UNIVERSAL CORP/VA has also vastly surpassed the industry average cash flow growth rate of -13.74%.
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Universal Corporation, through its subsidiaries, operates as a leaf tobacco merchant and processor worldwide. It engages in selecting, procuring, processing, packing, storing, shipping, and financing leaf tobacco for sale to, or for the account of, manufacturers of consumer tobacco products. The company has a P/E ratio of 14.2, below the average tobacco industry P/E ratio of 15.4 and below the S&P 500 P/E ratio of 17.7. Universal has a market cap of $1.18 billion and is part of the consumer goods sector and tobacco industry. Shares are up 11.3% year to date as of the close of trading on Tuesday.

You can view the full Universal 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.

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