Rating Change #6
PacWest Bancorp (PACW) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, expanding profit margins, good cash flow from operations, impressive record of earnings per share growth and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 280.1% when compared to the same quarter one year prior, rising from $3.50 million to $13.30 million.
- The gross profit margin for PACWEST BANCORP is currently very high, coming in at 89.40%. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, PACW's net profit margin of 16.70% significantly trails the industry average.
- Net operating cash flow has significantly increased by 97.36% to $59.61 million when compared to the same quarter last year. Despite an increase in cash flow of 97.36%, PACWEST BANCORP is still growing at a significantly lower rate than the industry average of 1651.58%.
- PACWEST BANCORP reported significant earnings per share improvement 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, PACWEST BANCORP reported poor results of -$1.81 versus -$0.29 in the prior year. This year, the market expects an improvement in earnings ($1.40 versus -$1.81).
- PACW, with its decline in revenue, slightly underperformed the industry average of 3.1%. Since the same quarter one year prior, revenues slightly dropped by 6.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
PacWest Bancorp operates as the bank holding company for Pacific Western Bank that provides commercial banking products and services to small to medium size businesses, the owners and employees of those businesses, and households primarily in Southern California. The company has a P/E ratio of 24.6, above the average banking industry P/E ratio of 24.3 and above the S&P 500 P/E ratio of 17.7. PacWest has a market cap of $672.6 million and is part of the financial sector and banking industry. Shares are down 11.4% year to date as of the close of trading on Wednesday.You can view the full PacWest Ratings Report or get investment ideas from our investment research center.
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