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 expanding profit margins, good cash flow from operations, impressive record of earnings per share growth, notable return on equity and compelling growth in net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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Highlights from the ratings report include:
- The gross profit margin for CAPITOL FEDERAL FINL INC is rather high; currently it is at 58.30%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 21.60% is above that of the industry average.
- Net operating cash flow has significantly increased by 66.47% to $21.77 million when compared to the same quarter last year. In addition, CAPITOL FEDERAL FINL INC has also vastly surpassed the industry average cash flow growth rate of -16.12%.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Thrifts & Mortgage Finance industry and the overall market on the basis of return on equity, CAPITOL FEDERAL FINL INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- CAPITOL FEDERAL FINL INC has improved earnings per share by 20.0% in the most recent quarter compared to 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, CAPITOL FEDERAL FINL INC reported lower earnings of $0.23 versus $0.41 in the prior year. This year, the market expects an improvement in earnings ($0.49 versus $0.23).
- Despite the weak revenue results, CFFN has outperformed against the industry average of 19.1%. Since the same quarter one year prior, revenues slightly dropped by 1.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
Capitol Federal Financial, Inc. is the bank holding company for Capitol Federal Savings Bank through which it provides commercial banking products and services. The company has a P/E ratio of 25.9, equal to the average banking industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Capitol Federal Financial has a market cap of $1.91 billion and is part of the
industry. Shares are up 1.1% year to date as of the close of trading on Tuesday.
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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.