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United Community Financial Corporation Stock Upgraded (UCFC)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model

NEW YORK ( TheStreet) -- United Community Financial Corporation (Nasdaq: UCFC) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:

  • UNITED COMMUNITY FINL CORP 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. During the past fiscal year, UNITED COMMUNITY FINL CORP turned its bottom line around by earning $0.00 versus -$1.21 in the prior year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Thrifts & Mortgage Finance industry. The net income increased by 103.5% when compared to the same quarter one year prior, rising from -$1.80 million to $0.06 million.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 12.8%. Since the same quarter one year prior, revenues slightly dropped by 7.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 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. Compared to other companies in the Thrifts & Mortgage Finance industry and the overall market on the basis of return on equity, UNITED COMMUNITY FINL CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Powered by its strong earnings growth of 100.00% and other important driving factors, this stock has surged by 194.02% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.

United Community Financial Corp. operates as the holding company for The Home Savings and Loan Company of Youngstown, Ohio that provides consumer and business banking service in Ohio and western Pennsylvania. The company has a P/E ratio of 31.8, below the average banking industry P/E ratio of 100 and above the S&P 500 P/E ratio of 17.7. United Community Financial has a market cap of $98.7 million and is part of the financial sector and banking industry. Shares are up 137.8% year to date as of the close of trading on Thursday.

You can view the full United Community Financial Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model

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