Analysts' Actions: AIG, Charter Communications, GNC, J.B. Hunt

TheStreet.com

NEW YORK (TheStreet) -- RATINGS CHANGES

American International Group was initiated with an outperform rating at RBC Capital. Twelve-month price target is $64. Company is a market leader and leveraged to higher interest rates, RBC Capital said.

Charter Communications was downgraded at Jefferies to hold from buy. Twelve-month price target is $175. Lengthy regulatory review will delay benefits from transactions with Comcast and Time Warner , Jefferies said.

Clarcor was upgraded at Robert Baird to outperform from neutral. Recent acquisition should augment improving core fundamentals, Baird said.

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GNC was downgraded at Jefferies to hold from buy. Twelve-month price target is $39. The company sees risk of near-term earnings disappointment as sales trends become weaker, Jefferies said.

J.B. Hunt was upgraded at Bernstein to outperform from market perform. Twelve-month price target is $91. Earnings growth is accelerating, Bernstein said.

MGIC Investment was downgraded to sell at TheStreet Ratings.

PetSmart was downgraded to sector perform from outperform at RBC Capital. Twelve-month price target is $66. Valuation call, as the stock is up 25% from recent lows, RBC Capital said.

Shoe Carnival was downgraded to hold at TheStreet Ratings.

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

TheStreet Ratings team rates CHARTER COMMUNICATIONS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate CHARTER COMMUNICATIONS INC (CHTR) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins."

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

  • CHTR's revenue growth has slightly outpaced the industry average of 14.6%. Since the same quarter one year prior, revenues rose by 14.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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 29.94% over the past year, a rise that has exceeded that of the S&P 500 Index. 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 gross profit margin for CHARTER COMMUNICATIONS INC is currently lower than what is desirable, coming in at 34.29%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.68% is significantly below that of the industry average.
  • The debt-to-equity ratio is very high at 110.94 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.15, which clearly demonstrates the inability to cover short-term cash needs.

TheStreet Ratings team rates HUNT (JB) TRANSPRT SVCS INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate HUNT (JB) TRANSPRT SVCS INC (JBHT) 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 revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

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

  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.2%. Since the same quarter one year prior, revenues slightly increased by 8.9%. 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.
  • The debt-to-equity ratio is somewhat low, currently at 0.80, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.15, which illustrates the ability to avoid short-term cash problems.
  • HUNT (JB) TRANSPRT SVCS INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, HUNT (JB) TRANSPRT SVCS INC increased its bottom line by earning $2.86 versus $2.59 in the prior year. This year, the market expects an improvement in earnings ($3.16 versus $2.86).
  • 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 Road & Rail industry and the overall market, HUNT (JB) TRANSPRT SVCS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for HUNT (JB) TRANSPRT SVCS INC is currently extremely low, coming in at 14.33%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.88% significantly trails the industry average.

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