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 (
-- Cape Bancorp
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and weak operating cash flow.
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Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Thrifts & Mortgage Finance industry average. The net income increased by 31.5% when compared to the same quarter one year prior, rising from $1.17 million to $1.53 million.
- The gross profit margin for CAPE BANCORP INC is currently very high, coming in at 79.20%. 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 12.20% trails the industry average.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Thrifts & Mortgage Finance industry and the overall market on the basis of return on equity, CAPE BANCORP INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- Net operating cash flow has significantly decreased to $0.33 million or 89.61% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
Cape Bancorp, Inc. operates as the holding company for the Cape Bank that provides a line of business and personal banking products to retail customers and small and mid-sized businesses primarily in Cape May and Atlantic Counties, New Jersey. The company has a P/E ratio of 54.2, above the S&P 500 P/E ratio of 17.7. Cape has a market cap of $115.8 million and is part of the financial sector and banking industry. Shares are up 9.2% year to date as of the close of trading on Tuesday.
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