Analysts' Actions: Cabot Oil, D.R. Horton, KB Home, Exxon Mobil

NEW YORK (TheStreet) -- RATINGS CHANGES

Cliffs Natural Resources (CLF) was downgraded to sell at TheStreet Ratings.

Centene (CNC) was downgraded at Wells Fargo to market perform from outperform. Florida managed-care Medicaid no longer appears to be a growth driver for the company, Wells Fargo said.

Cabot Oil & Gas (COG) was downgraded at Robert Baird to neutral from outperform. Company lacks visibility for Appalachian basin pricing, Robert Baird said.

D.R. Horton (DHI) was downgraded at MKM Partners to neutral from buy. Twelve-month price target is $24. Company is sacrificing near-term margins, MKM Partners said.

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General Motors (GM) was downgraded at Deutsche Bank to hold from buy. Twelve-month price target is $41. Company is seeing deceleration in contribution margins, Deutsche Bank said.

Starwood (HOT) was downgraded at Wells Fargo to market perform from outperform. Company lacks near-term catalysts, Wells Fargo said.

Informatica (INFA) was downgraded at Robert Baird to neutral from outperform. Twelve-month price target is $36. Demand has moderated in financial services and the public sector, Robert Baird said.

Informatica was downgraded at Credit Suisse to neutral from outperform. Twelve-month price target is $37. Estimates were also cut, given management's new guidance, Credit Suisse said.

KB Home (KBH) was upgraded to buy at TheStreet Ratings.

Maxim (MXIM) was downgraded at MKM Partners to neutral from buy. Twelve-month price target is $30. It will take time for the company to diversify its business away form saturated smartphone and tablet markets, MKM Partners said.

Northern Trust (NTRS) was upgraded at J.P. Morgan to neutral. Company is cutting costs and leveraged to strong equity markets, J.P. Morgan said.

Wellcare (WCG) was downgraded at Wells Fargo to market perform from outperform. Estimates also cut, given the company's new guidance, Wells Fargo said.

Exxon Mobil (XOM) was downgraded at Barclays to underweight from equal weight. Limited upside to comparison to peers with lack of near-term production growth, Barclays said.

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Now let's look at TheStreet Ratings' take on some of these stocks.

TheStreet Ratings team rates GENERAL MOTORS CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate GENERAL MOTORS CO (GM) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, 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 analysis by TheStreet Ratings Team goes as follows:

  • GM's revenue growth trails the industry average of 22.2%. Since the same quarter one year prior, revenues slightly increased by 1.4%. 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.
  • Net operating cash flow has significantly increased by 141.26% to $1,976.00 million when compared to the same quarter last year. In addition, GENERAL MOTORS CO has also vastly surpassed the industry average cash flow growth rate of 42.27%.
  • The debt-to-equity ratio is somewhat low, currently at 0.89, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.81 is somewhat weak and could be cause for future problems.
  • GENERAL MOTORS CO has experienced 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 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, GENERAL MOTORS CO reported lower earnings of $2.35 versus $2.93 in the prior year. This year, the market expects an improvement in earnings ($2.87 versus $2.35).
  • In its most recent trading session, GM has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

TheStreet Ratings team rates EXXON MOBIL CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate EXXON MOBIL CORP (XOM) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has increased to $15,103.00 million or 11.11% when compared to the same quarter last year. Despite an increase in cash flow, EXXON MOBIL CORP's average is still marginally south of the industry average growth rate of 17.02%.
  • 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. 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.
  • XOM's debt-to-equity ratio is very low at 0.12 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that XOM's debt-to-equity ratio is low, the quick ratio, which is currently 0.55, displays a potential problem in covering short-term cash needs.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.4%. Since the same quarter one year prior, revenues slightly dropped by 2.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

This article was written by a staff member of TheStreet.

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