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) -- Sun Bancorp (Nasdaq:SNBC) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been unimpressive growth in net income over time.
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- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Commercial Banks industry. The net income has significantly decreased by 54.1% when compared to the same quarter one year ago, falling from $2.68 million to $1.23 million.
- 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 Commercial Banks industry and the overall market, SUN BANCORP INC/NJ's return on equity significantly trails that of both the industry average and the S&P 500.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- SUN BANCORP INC/NJ has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, SUN BANCORP INC/NJ continued to lose money by earning -$1.26 versus -$7.31 in the prior year. This year, the market expects an improvement in earnings (-$0.31 versus -$1.26).
- The gross profit margin for SUN BANCORP INC/NJ is currently very high, coming in at 84.20%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, SNBC's net profit margin of 3.20% significantly trails the industry average.
-- Written by a member of TheStreet Ratings Staff
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