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Preferred Bank Stock Upgraded (PFBC)

NEW YORK ( TheStreet) -- Preferred Bank (Nasdaq: PFBC) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and compelling growth in net income. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 5.4%. Since the same quarter one year prior, revenues rose by 27.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The gross profit margin for PREFERRED BANK LOS ANGELES is rather high; currently it is at 66.80%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 25.80% trails the industry average.
  • PREFERRED BANK LOS ANGELES reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, PREFERRED BANK LOS ANGELES turned its bottom line around by earning $0.93 versus -$4.80 in the prior year. For the next year, the market is expecting a contraction of 17.2% in earnings ($0.77 versus $0.93).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Commercial Banks industry and the overall market, PREFERRED BANK LOS ANGELES's return on equity is below that of both the industry average and the S&P 500.
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Preferred Bank operates as a commercial bank in California. The company provides a range of deposit and loan products and services to small and mid-sized businesses and their owners, entrepreneurs, real estate developers and investors, professionals, and high net worth individuals. The company has a P/E ratio of 9.9, below the S&P 500 P/E ratio of 17.7. Preferred has a market cap of $101.6 million and is part of the financial sector and banking industry. Shares are up 23.1% year to date as of the close of trading on Thursday.

You can view the full Preferred Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet RatingsStaff

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