NEW YORK (
-- Heartland Financial USA
) 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, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Commercial Banks industry. The net income has decreased by 20.8% when compared to the same quarter one year ago, dropping from $5.35 million to $4.24 million.
- Net operating cash flow has significantly decreased to $1.19 million or 91.47% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Commercial Banks industry and the overall market, HEARTLAND FINANCIAL USA INC's return on equity is below that of both the industry average and the S&P 500.
- The gross profit margin for HEARTLAND FINANCIAL USA INC is rather high; currently it is at 63.30%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, HTLF's net profit margin of 7.00% significantly trails the industry average.
- HTLF's revenue growth has slightly outpaced the industry average of 3.5%. Since the same quarter one year prior, revenues slightly increased by 0.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
Heartland Financial USA, Inc., through its bank subsidiaries, provides commercial and retail banking services to businesses and individuals. The company has a P/E ratio of 13.4, equal to the average banking industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Heartland Financial USA has a market cap of $235 million and is part of the
industry. Shares are down 21.4% year to date as of the close of trading on Thursday.
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