Worthington Industries (WOR), which I first wrote about on June 10, 2009 at a price of $15.05, has completed the toughest part of its journey back to profitability.

Moving forward, Worthington's earnings increases will be dependent on the rebound in the processed steel and metal framing industries. As such, expected, substantial increases in durable goods orders in the second half of 2010 should provide a modest tailwind for WOR in 2010; the U.S. auto sector's doldrums represent the company's largest headwind.

The First Call FY2010/FY2011 EPS estimates for WOR are 79 cents to $1.22. Each EPS estimate looks about 10% low, according to my analysis.

Here are some highlights from this past week's earnings coverage on BloggingStocks:

• Acuity Brands Inc. (AYI) Q2 results were essentially flat but an analyst's upgraded helped boost shares.
• Borders Group Inc. (BGP) reported strong Q4 earnings due to cost cutting but revenue continued to decline.
• Cal-Maine Foods Inc. (CALM) received an analyst's downgrade on valuation following release of its Q3 report.
• CarMax Inc. (KMX) rose to a new 52-week high following better-than-expected Q4 earnings and sales results.
• Charming Shoppes Inc. (CHRS) posted a smaller-than-expected Q4 net loss and said same-store sales declined.

Worthington Industries (WOR), a metals manufacturing entity based in Columbus, Ohio which counts AK Steel (AKS) as a colleague, issued third-quarter results on Thursday morning. By the end of yesterday's session, the market had spoken: it didn't like the data at all. The stock ended in the red by well over 6%, on strong volume.

According to the press release, net income became a net loss this time around, coming in at 22 cents per share. That compared to a positive profit of 2 cents per share in the similar quarter in 2009. Cash flow for the nine-month period fell 40%. Cash was used for operations in Q3 itself.

For now, I'm placing a Hold on Worthington Industries' (NYSE: WOR) shares, first recommended with a Buy rating on June 10, 2009 at a price of $15.05.

The steel processing sector was one of those fields that was rudely treated by Wall Street as the U.S. and global recessions took hold, and niche player Worthington did not escape the aforementioned.

Analyst upgrades:

• Baird upgraded Tenet Healthcare (NYSE: THC) to Outperform from Neutral and raised its target to $6 from $5 based on cost trends, valuation, and expectations the company can beat expectations over the next six months.
• Oppenheimer upgraded E-House (NYSE: EJ) to Outperform from Perform following the company's better-than-expected Q2 results. The firm has a price target of $27 on shares.
• JPMorgan upgraded Avery Dennison (NYSE: AVY) to Overweight from Neutral and has a $33 target on the stock. The firm cites valuation for the upgrade following the recent underperformance and expects the company's margins to expand as demand rebounds.
• Citigroup (NYSE: C) was upgraded to Buy from Underperform at BofA/Merrill.
• Taubman Centers (NYSE: TCO) was upgraded to Conviction Buy from Buy at Goldman.
• First Niagara (NASDAQ: FNFG) was upgraded to Buy from Neutral at Janney Montgomery.

The steel processing sector was one of those fields that was rudely treated by Wall Street as the U.S. and global recessions took hold.

Further, niche player Worthington Industries (NYSE: WOR) did not escape the above, but Wall Street's mistake has created an opportunity for investors who can tolerate moderate risk.

"The steel stocks tend to go through boom and bust cycles depending on global economic activity; they have been pummeled over the last year, as the global economy slowed," notes turnaround expert George Putnam.

In his The Turnaround Letter, he explains, "But the news about steel is not all bad." Indeed, he believes some steel companies are poised for a turnaround. Here's his review of 6 leading steel production companies.

"Weakness in two big steel consuming industries, autos and construction, has been particularly troublesome for the steelmakers.

"However, there is evidence that steel inventories are gradually being worked off to low levels. There are also signs that economic activity in China, which is a huge consumer of steel, will not fall off as far as some economists initially feared.

Earnings reports continue to dribble in as the quarter winds down. Much of the attention this week will be on homebuilders KB Home (NYSE: KBH) and Lennar Corp. (NYSE: LEN) as investors look for any sign that the housing sector has bottomed (home sales numbers are also due out this week; see below). Analysts surveyed by Thomson Financial anticipate that both companies will report that they narrowed their losses in the most recent quarter.

KB Home's expected $1.25 per share loss, on revenue of $725.5 million, compares to the previous quarter loss of $3.30 and to a year-ago loss of $6.19. However, KB Home's losses in the past few quarters have been deeper than expected. The Los Angeles-based homebuilder's long-range earnings growth forecast is 10.5%, less than the S&P 500. Analysts continue to recommend holding KB Home, and have for at least 120 days. Shares, however, reached a new 52-week high of $31.69 on Friday, and they are up 10.5% year to date.

Lennar is expected to post a loss of 52 cents per share, on revenue of $1.1 billion. That compares to the previous quarter's per-share loss of 76 cents and to a year-ago loss of $3.25. While Lennar also has tended in the past few quarters to miss expectations, the Miami-based company managed a positive surprise in the first quarter of 2008. Lennar's long-range earnings growth forecast is 10.3%, about the same as KB Home's. Analysts also recommend holding Lennar. Friday, shares of Lennar also reached a 52-week high, $27.75, but they are down 6.4% year to date.

MOST NOTEWORTHY: Micron, Chico's FAS and Lifetime Brands were today's noteworthy initiations:

• Oppenheimer assumed Micron (NYSE: MU) with an Outperform rating and $9.50 target, as they believe price declines in the DRAM market moderated in 2H of the December quarter and that concerns of oversupply are already priced into shares.
  
• Stanford believes shares of Chico's FAS (NYSE: CHS) will remain under pressure over the next three to six months given the adverse economic conditions and the company's "less-than-exciting" fashion assortment. The firm started shares with a Hold rating and $10 target.
  
• Lifetime Brands (NASDAQ: LCUT) was initiated with a Neutral rating at SunTrust. The firm prefers to wait for greater visibility on the U.S. consumer spending environment before becoming more constructive on the name.

OTHER INITIATIONS:

• Soleil initiated Worthington (NYSE: WOR) with a Hold rating.
  
• Jefferies started Esterline Technologies (NYSE: ESL) with a Buy rating and $58 target.
  
• Oppenheimer assumed Spansion (NASDAQ: SPSN) with a Perform rating.

MOST NOTEWORTHY: Lululemon (LULU) and Worthington (WOR) were today's noteworthy initiations:

• RBC Capital views Lululemon (NASDAQ: LULU), which IPO'd today, as unique opportunity to participate in an early stage, retail growth story, starting shares with an Outperform rating and $23 target.

• Worthington (NYSE: WOR) is likely to continue to have headwinds in the near-term, according to CIBC; They believe shares could be a takeover target, initiating shares with a Sector Performer rating and $24 target...

OTHER INITIATIONS:

• Bon-Ton Stores (NASDAQ: BONT) was initiated with a Neutral at First Albany.

• William Blair started shares of Capella Education (NASDAQ: CPLA) with an Outperform rating.

• Warner Music Group (NYSE: WMG) was reinstated with a Neutral rating at Goldman Sachs.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: The more noteworthy downgrades today came from Calyon, which cut five companies in the oil services and equipment sector:

• Calyon is taking a more cautious stance due to valuations in the sector. The firm believes strong fundamentals are now reflected in share prices. As such, Calyon downgraded Global Industries, Ltd (NASDAQ: GLBL), Ensco International Inc (NYSE: ESV), Transocean Inc (NYSE: RIG) and Schlumberger Ltd (NYSE: SLB) to Add from Neutral and downgraded Gerber Scientific, Inc (NYSE: GRB) to Neutral from Add...

OTHER DOWNGRADES:

• Piper Jaffray cut ValueClick, Inc (NASDAQ: VCLK) to Market Perform from Outperform.

• UBS cut Lyondell Chemical Co (NYSE: LYO) and IndyMac Bancorp, Inc (NYSE: IMB) to Neutral from Buy.

• Goldman downgraded Worthington Industries, Inc (NYSE: WOR) to Sell from Neutral.

• Matrix USA cut Allergan, Inc (NYSE: AGN) to Sell from Hold and Fifth Third Bancorp (NASDAQ: FITB) was downgraded to Underperform from Market Perform at Keefe Bruyette.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: The Entertainment Sector was the most notable downgrade today, made by Bank of America.

• The Entertainment Sector was downgraded to Market Weight from Overweight from Bank of America, citing valuation, given less upside to their targets. Bank of America did not make any changes to their individual stock ratings and kept News Corp (NYSE: NWS) as their Focus Stock.

OTHER DOWNGRADES:

• Deutsche Bank downgraded Level 3 Communications (NASDAQ: LVLT) to Sell from Hold, citing valuation. The firm recommended investors swap into Time Warner Telecom (NASDAQ: TWTC) instead.

• Prudential downgraded shares of Caremark RX (NYSE: CMX) to Neutral from Overweight. The firm doesn't believe the offer by CVS Corp (NYSE: CVS) for a $2 special dividend and the promise to repurchase 150M shares by the new company benefits Caremark RX shareholders as much as a simple increase in shares or cash from CVS would have.

• Matrix USA downgraded Worthington Industries (NYSE: WOR) to Sell from Hold, citing the slowing demand for steel processing and metal framing.

• CIBC downgraded shares of Commerce Bancorp (NYSE: CBH) to Sector Performer from Outperformer on increased regulatory uncertainty following the company's announcement that it is being investigated by the Office of the Comptroller of the Currency.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).