NEW YORK (
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, notable return on equity, expanding profit margins and increase in stock price during the past year. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.
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Highlights from the ratings report include:
- CAPITALSOURCE INC 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. We feel that this trend should continue. During the past fiscal year, CAPITALSOURCE INC continued to lose money by earning -$0.17 versus -$0.44 in the prior year. This year, the market expects an improvement in earnings ($2.02 versus -$0.17).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 2235.5% when compared to the same quarter one year prior, rising from $16.59 million to $387.55 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. In comparison to the other companies in the Commercial Banks industry and the overall market, CAPITALSOURCE INC's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- 39.90% is the gross profit margin for CAPITALSOURCE INC which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, CSE's net profit margin of 307.60% significantly outperformed against the industry.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 16.1%. Since the same quarter one year prior, revenues fell by 12.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
CapitalSource Inc., through its subsidiaries, provides financial products to small and middle market businesses in the United States. The company offers senior secured, asset-based, real estate, and cash flow loans, which have a first priority lien in the collateral securing the loan. The company has a P/E ratio of 4.5, below the S&P 500 P/E ratio of 17.7. CapitalSource has a market cap of $1.55 billion and is part of the
industry. Shares are down 2.2% year to date as of the close of trading on Wednesday.
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-- Written by a member of TheStreet Ratings Staff
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.