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NEW YORK (TheStreet) -- Homestreet (HMST) - Get Report has been downgraded by TheStreet Ratings from Hold to Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate HOMESTREET INC (HMST) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. When compared to other companies in the Thrifts & Mortgage Finance industry and the overall market, HOMESTREET INC's return on equity is below that of both the industry average and the S&P 500.
- HMST has underperformed the S&P 500 Index, declining 12.01% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- HOMESTREET INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, HOMESTREET INC reported lower earnings of $1.61 versus $5.62 in the prior year. For the next year, the market is expecting a contraction of 17.1% in earnings ($1.34 versus $1.61).
- The gross profit margin for HOMESTREET INC is currently very high, coming in at 95.73%. Regardless of HMST's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HMST's net profit margin of 6.69% is significantly lower than the industry average.
- You can view the full analysis from the report here: HMST Ratings Report