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, expanding profit margins and compelling growth in net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the ratings report include:
- EAST WEST BANCORP 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 year. We feel that this trend should continue. During the past fiscal year, EAST WEST BANCORP INC increased its bottom line by earning $1.58 versus $0.83 in the prior year. This year, the market expects an improvement in earnings ($1.80 versus $1.58).
- The gross profit margin for EAST WEST BANCORP INC is currently very high, coming in at 77.80%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, EWBC's net profit margin of 24.50% significantly trails the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.0%. Since the same quarter one year prior, revenues slightly dropped by 3.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Commercial Banks industry average, but is greater than that of the S&P 500. The net income increased by 17.5% when compared to the same quarter one year prior, going from $56.35 million to $66.21 million.
- In its most recent trading session, EWBC has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Despite the decline in its share price over the last year, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry. We feel, however, that other strengths this company displays compensate for this.
East West Bancorp, Inc. operates as the holding company for East West Bank, which provides a range of personal and commercial banking services to small and medium-sized businesses, business executives, professionals, and other individuals in California. The company has a P/E ratio of 13.5, below the average banking industry P/E ratio of 13.9 and below the S&P 500 P/E ratio of 17.7. East West has a market cap of $3.33 billion and is part of the
industry. Shares are up 13.1% year to date as of the close of trading on Wednesday.
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-- Written by a member of TheStreet RatingsStaff