TheStreet Ratings Top 10 Rating Changes

Tickers in this article: ADM BHI ERIC ETR EXC IX RCL SWN UBS VRTX

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 136 U.S. common stocks for week ending August 3, 2012. 65 stocks were upgraded and 71 stocks were downgraded by our stock model.

Rating Change #10

UBS AG has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, deteriorating net income, generally weak debt management, disappointing return on equity and feeble growth in its earnings per share.

Highlights from the ratings report include:

  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 36.31%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 66.66% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
  • 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 70.8% when compared to the same quarter one year ago, falling from $1,380.98 million to $403.74 million.
  • The debt-to-equity ratio is very high at 5.61 and currently higher than the industry average, implying that there is very poor management of debt levels within the company.
  • 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, UBS AG underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • UBS AG 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, UBS AG reported lower earnings of $1.14 versus $2.09 in the prior year. This year, the market expects an improvement in earnings ($1.20 versus $1.14).

UBS AG, a financial services firm, provides wealth management, asset management, and investment banking products and services to private, corporate, and institutional clients worldwide. The company is also involved in retail and commercial banking in Switzerland. The company has a P/E ratio of 9.8, below the average banking industry P/E ratio of 11.7 and below the S&P 500 P/E ratio of 17.7. UBS has a market cap of $40.63 billion 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 Thursday.

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

Rating Change #9

Ericsson Telephone Company 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, 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 weak operating cash flow.

Highlights from the ratings report include:

  • Although ERIC's debt-to-equity ratio of 0.21 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.44, which illustrates the ability to avoid short-term cash problems.
  • ERICSSON 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. 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, ERICSSON increased its bottom line by earning $0.56 versus $0.50 in the prior year. This year, the market expects an improvement in earnings ($0.57 versus $0.56).
  • Net operating cash flow has significantly decreased to -$202.01 million or 122.04% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much 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. When compared to other companies in the Communications Equipment industry and the overall market, ERICSSON's return on equity is below that of both the industry average and the S&P 500.

Ericsson provides network infrastructure, telecom services, and multimedia solutions to mobile and fixed networks operators worldwide. The company has a P/E ratio of 15.8, above the average telecommunications industry P/E ratio of 13.4 and below the S&P 500 P/E ratio of 17.7. Ericsson Telephone has a market cap of $28.06 billion and is part of the technology sector and telecommunications industry. Shares are down 9.9% year to date as of the close of trading on Tuesday.

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

Rating Change #8

Archer-Daniels Midland Company has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:

  • Despite the weak revenue results, ADM has outperformed against the industry average of 24.2%. Since the same quarter one year prior, revenues slightly dropped by 0.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Despite currently having a low debt-to-equity ratio of 0.57, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.
  • The gross profit margin for ARCHER-DANIELS-MIDLAND CO is currently extremely low, coming in at 4.60%. 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'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 Food Products industry and the overall market, ARCHER-DANIELS-MIDLAND CO's return on equity is below that of both the industry average and the S&P 500.

Archer-Daniels-Midland Company procures, transports, stores, processes, and merchandises agricultural commodities and products in the United States and internationally. The company has a P/E ratio of 13.8, equal to the average food & beverage industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Archer-Daniels Midland has a market cap of $18.1 billion and is part of the consumer goods sector and food & beverage industry. Shares are down 8.8% year to date as of the close of trading on Wednesday.

You can view the full Archer-Daniels Midland Ratings Report or get investment ideas from our investment research center.

Rating Change #7

Vertex Pharmaceuticals 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, notable return on equity and reasonable valuation levels. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:

  • VRTX's very impressive revenue growth greatly exceeded the industry average of 8.1%. Since the same quarter one year prior, revenues leaped by 265.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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 Biotechnology industry and the overall market, VERTEX PHARMACEUTICALS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Biotechnology industry. The net income increased by 62.7% when compared to the same quarter one year prior, rising from -$174.07 million to -$64.93 million.
  • In its most recent trading session, VRTX 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 fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

Vertex Pharmaceuticals Incorporated engages in discovering, developing, manufacturing, and commercializing small molecule drugs for the treatment of serious diseases worldwide. The company has a P/E ratio of 34, below the average drugs industry P/E ratio of 36 and above the S&P 500 P/E ratio of 17.7. Vertex has a market cap of $10.41 billion and is part of the health care sector and drugs industry. Shares are up 50.4% year to date as of the close of trading on Tuesday.

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

Rating Change #6

Royal Caribbean Cruises Ltd 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 and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:

  • RCL's revenue growth has slightly outpaced the industry average of 0.2%. Since the same quarter one year prior, revenues slightly increased by 3.0%. 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.
  • ROYAL CARIBBEAN CRUISES LTD 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. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ROYAL CARIBBEAN CRUISES LTD increased its bottom line by earning $2.78 versus $2.37 in the prior year. For the next year, the market is expecting a contraction of 35.3% in earnings ($1.80 versus $2.78).
  • 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 Hotels, Restaurants & Leisure industry and the overall market, ROYAL CARIBBEAN CRUISES LTD's return on equity is below 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 Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 103.9% when compared to the same quarter one year ago, falling from $93.49 million to -$3.65 million.

Royal Caribbean Cruises Ltd. operates in the cruise vacation industry worldwide. It owns five cruise brands, which comprise Royal Caribbean International, Celebrity Cruises, Pullmantur, Azamara Club Cruises, and CDF Croisieres de France. The company has a P/E ratio of 11.2, equal to the average leisure industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Royal Caribbean Cruises has a market cap of $5.36 billion and is part of the services sector and leisure industry. Shares are up 1.1% year to date as of the close of trading on Tuesday.

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

Rating Change #5

Exelon Corp 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, 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 somewhat weak growth in earnings per share.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 0.8%. Since the same quarter one year prior, revenues rose by 29.8%. 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 increased to $1,735.00 million or 42.21% when compared to the same quarter last year. In addition, EXELON CORP has also vastly surpassed the industry average cash flow growth rate of -19.17%.
  • The debt-to-equity ratio is somewhat low, currently at 0.87, 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 0.72 is somewhat weak and could be cause for future problems.
  • The share price of EXELON CORP has not done very well: it is down 13.72% 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, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
  • EXELON CORP 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 two years. We anticipate that this should continue in the coming year. During the past fiscal year, EXELON CORP reported lower earnings of $3.75 versus $3.86 in the prior year. For the next year, the market is expecting a contraction of 25.6% in earnings ($2.79 versus $3.75).

Exelon Corporation, a utility services holding company, engages in the generation of electricity in the United States. It generates electricity from nuclear, fossil, hydro, and renewable energy sources. The company has a P/E ratio of 12.9, equal to the average utilities industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Exelon has a market cap of $33.35 billion and is part of the utilities sector and utilities industry. Shares are down 9.8% year to date as of the close of trading on Thursday.

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

Rating Change #4

Baker Hughes Inc 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, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and impressive record of earnings per share growth. 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 Energy Equipment & Services industry. The net income increased by 29.9% when compared to the same quarter one year prior, rising from $338.00 million to $439.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.8%. Since the same quarter one year prior, revenues rose by 12.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.30, 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 1.36, which illustrates the ability to avoid short-term cash problems.
  • BAKER HUGHES INC has improved earnings per share by 29.9% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, BAKER HUGHES INC increased its bottom line by earning $3.97 versus $2.00 in the prior year. For the next year, the market is expecting a contraction of 5.3% in earnings ($3.76 versus $3.97).

Baker Hughes Incorporated supplies oilfield services, products, and technology services and systems to the oil and natural gas industry worldwide. The company has a P/E ratio of 11.1, equal to the average energy industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Baker Hughes has a market cap of $20.36 billion and is part of the basic materials sector and energy industry. Shares are down 4.8% year to date as of the close of trading on Thursday.

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

Rating Change #3

Entergy Corp 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 and growth in earnings per share. We feel these strengths outweigh the fact that the company has had generally poor debt management on most measures that we evaluated.

Highlights from the ratings report include:

  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. 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 exceeded that of the S&P 500 and greatly outperformed compared to the Electric Utilities industry average. The net income increased by 15.6% when compared to the same quarter one year prior, going from $320.60 million to $370.58 million.
  • ENTERGY CORP has improved earnings per share by 17.0% 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 two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ENTERGY CORP increased its bottom line by earning $7.54 versus $6.65 in the prior year. For the next year, the market is expecting a contraction of 29.4% in earnings ($5.32 versus $7.54).
  • ETR, with its decline in revenue, slightly underperformed the industry average of 2.8%. Since the same quarter one year prior, revenues fell by 10.2%. The declining revenue has not hurt the company's bottom line, with increasing 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 Electric Utilities industry and the overall market on the basis of return on equity, ENTERGY CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

Entergy Corporation, together with its subsidiaries, engages in the electric power production and retail electric distribution operations in the United States. The company operates in two segments, Utility and Entergy Wholesale Commodities. The company has a P/E ratio of 13.8, equal to the average utilities industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Entergy has a market cap of $12.94 billion and is part of the utilities sector and utilities industry. Shares are up 0% year to date as of the close of trading on Wednesday.

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

Rating Change #2

Southwestern Energy Company has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • Net operating cash flow has increased to $444.66 million or 12.15% when compared to the same quarter last year. In addition, SOUTHWESTERN ENERGY CO has also vastly surpassed the industry average cash flow growth rate of -52.08%.
  • The gross profit margin for SOUTHWESTERN ENERGY CO is rather high; currently it is at 57.80%. Regardless of SWN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SWN's net profit margin of 16.40% compares favorably to the industry average.
  • SWN, with its decline in revenue, slightly underperformed the industry average of 6.2%. Since the same quarter one year prior, revenues slightly dropped by 2.9%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • SOUTHWESTERN ENERGY CO's earnings per share declined by 20.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SOUTHWESTERN ENERGY CO increased its bottom line by earning $1.82 versus $1.73 in the prior year. For the next year, the market is expecting a contraction of 34.1% in earnings ($1.20 versus $1.82).
  • Despite currently having a low debt-to-equity ratio of 0.40, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that SWN's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.53 is low and demonstrates weak liquidity.

Southwestern Energy Company, an independent energy company, engages in the exploration, development, and production of natural gas and crude oil in the United States. The company operates through two segments, Exploration and Production, and Midstream Services. The company has a P/E ratio of 18.8, below the average energy industry P/E ratio of 19 and above the S&P 500 P/E ratio of 17.7. Southwestern Energy has a market cap of $11.52 billion and is part of the basic materials sector and energy industry. Shares are up 7.3% year to date as of the close of trading on Tuesday.

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

Rating Change #1

Orix Corporation 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, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally poor debt management and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 19.6%. 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.
  • ORIX 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, ORIX CORP increased its bottom line by earning $3.95 versus $2.94 in the prior year. This year, the market expects an improvement in earnings ($6.45 versus $3.95).
  • The gross profit margin for ORIX CORP is rather high; currently it is at 50.40%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 13.80% trails the industry average.
  • IX has underperformed the S&P 500 Index, declining 11.07% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The debt-to-equity ratio is very high at 3.29 and currently higher than the industry average, implying that there is very poor management of debt levels within the company.

ORIX Corporation, an integrated financial services company, provides various products and services to corporate and retail customers in Japan and internationally. The company has a P/E ratio of 12, above the average financial services industry P/E ratio of 10.5 and below the S&P 500 P/E ratio of 17.7. Orix has a market cap of $10.3 billion and is part of the financial sector and financial services industry. Shares are up 16.8% year to date as of the close of trading on Friday.

You can view the full Orix 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.

Tickers in this article: ADM BHI ERIC ETR EXC IX RCL SWN UBS VRTX