NEW YORK (TheStreet) -- City Holding Company (Nasdaq:CHCO) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, revenue growth, expanding profit margins, notable return on equity and growth in earnings per share. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value. Highlights from the ratings report include:
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- CHCO's revenue growth trails the industry average of 20.7%. Since the same quarter one year prior, revenues slightly increased by 0.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The gross profit margin for CITY HOLDING CO is currently very high, coming in at 88.60%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 27.60% significantly outperformed against the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, CITY HOLDING CO has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- CITY HOLDING CO has improved earnings per share by 31.0% in the most recent quarter compared to the same quarter a year ago. 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, CITY HOLDING CO reported lower earnings of $2.48 versus $2.69 in the prior year. This year, the market expects an improvement in earnings ($2.69 versus $2.48).
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