TSC Ratings' Updates: Cypress

We've upgraded First Bancorp(FBNC Quote), which operates as a bank holding company for First Bank, from hold to buy, driven by its increase in net income, revenue growth, expanding profit margins, attractive valuation levels and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Net income increased by 7.9% compared with the same quarter last year, going from $5.74 million to $6.20 million and outperforming both the S&P 500 and the commercial banks industry. Revenue rose 1.8% since the same quarter a year ago, underperforming the industry average of 5.2% growth., and EPS declined. First Bancorp's gross profit margin is rather high at 58.7%, having increased from the same quarter last year. Its net profit margin of 14.30% is above that of the industry average.

EPS declined by 7.5% in the most recent quarter compared with the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, First Bancorp increased its bottom line by earning $1.51 vs. $1.34 in the prior year

We've upgraded Navigators Group(NAVG Quote), an international insurance holding company, from hold to buy, driven by its 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 sub par growth in net income.

Navigators' debt-to-equity ratio is very low at 0.19 and is currently below that of the industry average, implying very successful management of debt levels. Revenue dropped by 3.8% since the same quarter last year, and EPS decreased. The company's current return on equity has slightly decreased from the same quarter one year prior, implying a minor weakness in the organization, but Navigators' return on equity exceeds that of both the insurance industry average and the S&P 500.