BCE, Genesee & Wyoming: Ratings Changes

BOSTON (TheStreet) -- TheStreet.com's stock-rating model downgraded Canadian telecommunications provider BCE(BCE Quote) to "hold."

The numbers: Second-quarter net income decreased 5% to $372 million, or 46 cents a share, as revenue declined 2% to $4.3 billion. BCE's gross and operating margins remained steady at 72% and 23%, respectively. A quick ratio of 0.7 indicates weak liquidity. A debt-to-equity ratio of 0.7 reflects conservative leverage.

The numbers: BCE has risen 20% this year, more than the Dow Jones Industrial Average and S&P 500 Index. The stock trades at a price-to-earnings ratio of 19, on par with the market, but more expensive than shares of telecom peers. The shares pay a 6.2% dividend yield.

The model upgraded railroad operator Genesee & Wyoming(GWR Quote) to "buy."

The numbers: Third-quarter net income inched up 2% to $22 million, but earnings per share fell 13% to 48 cents because its share count had risen. Revenue declined 14% to $136 million. The company's gross margin rose from 42% to 47%, but its operating margin remained steady at 21%. A quick ratio of 1.1 indicates adequate liquidity. A debt-to-equity ratio of 0.7 is less than the industry average, demonstrating restrained leverage.

The stock: Genesee & Wyoming has fallen 3% this year, lagging behind major U.S. indices. The stock trades at a price-to-earnings ratio of 16, a discount to the market and railroad peers. The company doesn't pay dividends.

The model downgraded HCP(HCP Quote), a real estate investment trust that focuses on health care properties, to "hold."

The numbers: The company swung to a third-quarter loss of $47 million, or 19 cents a share, from a profit of $125 million, or 36 cents, in the year-earlier period. Revenue dropped 11% to $297 million. HCP's gross and operating margins decreased from 56% to 49%. The company has a poor financial position, with $5.6 billion of debt and $176 million of cash.