At The Motley Fool, we poke plenty of fun at Wall Street analysts and their endless cycle of upgrades, downgrades, and "initiating coverage at neutral." In our recurring column "This Just In," we cover the most headline-worthy upgrades and downgrades, testing the analysts' logic and examining their records to help you decide whether they're worth listening to at all.

In "Get to Know a Guru," we go another route. Here, we use upgrade and downgrade news as a springboard to introduce you to some of the lesser-known names in analyst-land. Up this week: Rochdale Securities.

Profiles in punditry
An unfamiliar name (to me, at least) popped up on MSN-Money's tally of analyst downgrades yesterday, when Rochdale Securities upgraded Wal-Mart (NYSE:WMT) to a "buy" rating. "Wal-Mart" -- that's a name we all know. But if you're wondering just who the heck "Rochdale" is, you're not alone. Fortunately, that's the kind of question I aim to address in this column. So without further ado, let's ...

Get to know this guru
Here's what CAPS has to say about the firm:

Rochdale Securities offers brokerage services to a range of institutional clients. The research division focuses on producing independent, high-quality analysis for the institutional market. They even offer the investment community a proprietary product -- "ROCHDALE RESEARCH" -- which provides objective, creative, and uncompromised analysis of companies under coverage.

Further inquiry reveals that the firm set up shop in New York City more than 30 years ago and focuses its research in the financial, IT, consumer discretionary, health-care, and industrial sectors (in that order). Retail stocks such as Wal-Mart may not be its forte, unless -- as I'm guessing -- the firm classifies them under the "consumer discretionary" rubric.

Are these guys any good?
So much for the firm's biography. What we really want to know about is its resume. When Rochdale speaks, should investors listen?

Um, in a word, no. Reviewing the firm's record on CAPS, we find that Rochdale gets only about 43% of its stock calls right. Worse, its bad calls outweigh its good ones, to such an extent as to drive its CAPS rating down into sub-20th-percentile territory. For example, while Rochdale recommended:


Rochdale Says:

CAPS Says (Out of 5):

Rochdale 's Pick Beating S&P By:

National City (NYSE:NCC)



47 points

Williams (NYSE:WMB)



9 points

... it also recommended:


Rochdale Says:

CAPS Says:

Rochdale 's Pick Lagging S&P By:




37 points

Wachovia (NYSE:WB)



15 points

JPMorgan Chase (NYSE:JPM)



11 points

Abbott Labs (NYSE:ABT)



9 point

Separating the analyst from the analyzed
Its record aside, there's plenty of reason to disagree with Rochdale's endorsement of Wal-Mart on this recommendation's individual merits -- or lack thereof. For example, Rochdale argues that we should expect to see Wal-Mart post improved margins, returns on invested capital, and same-store sales in the future. The analyst predicts that these improvements will yield 6% to 8% annual sales growth and low-double-digit earnings growth going forward -- basically what every other analyst says, with the consensus now tracking toward 12% annual profits growth over the next five years.

Problem is, Wal-Mart sells for a price-to-earnings ratio of 14, and for 48 times trailing free cash flow. The first valuation suggests that Wal-Mart is no bargain. The second confirms it.

Foolish takeaway
Like Stephen Colbert, I think $2 for a 12-pack of Wal-Mart tube socks is a bargain. Unlike Rochdale, I think the stock is not.

Fools of a feather rarely fly together. Bargain-shopper Philip Durell offers his own bullish prognosis on Wal-Mart in our Motley Fool Inside Value newsletter service. Find out why when you try out the service for 30 days. There's no question about the value of this bargain: Free trials don't cost a penny.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 1,862 out of more than 65,000 players. Wal-Mart is an Inside Value recommendation, and JPMorgan Chase is an Income Investor selection. The Fool has a disclosure policy.