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Sterling Bancorp Stock Downgraded (STL)

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) -- Sterling Bancorp (NYSE: STL) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 30.1%. Since the same quarter one year prior, revenues slightly increased by 1.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • STERLING BANCORP/NY has improved earnings per share by 21.4% 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, STERLING BANCORP/NY increased its bottom line by earning $0.51 versus $0.20 in the prior year. This year, the market expects an improvement in earnings ($0.65 versus $0.51).
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
  • Net operating cash flow has significantly decreased to -$13.92 million or 133.03% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
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Sterling Bancorp operates as a bank holding company for Sterling National Bank that provides a range of banking and financial products and services in the United States, primarily in New York, New Jersey, and Connecticut. The company has a P/E ratio of 14.3, below the S&P 500 P/E ratio of 17.7. Sterling has a market cap of $284.2 million and is part of the financial sector and banking industry. Shares are up 6.3% year to date as of the close of trading on Wednesday.

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

-- Written by a member of TheStreet Ratings Staff

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