NEW YORK (TheStreet) -- Shares of Hudson City Bancorp (HCBK) were falling 6.2% to $9.84 on heavy trading volume Monday after the bank announced its merger with M&T Bank (MTB) - Get Report was delayed.
Shares of M&T Bank were falling 3.1% to $123.28 following the announcement.
The banks announced their merger will not close by the announced date of May 1. Hudson City Bancorp said the Federal Reserve told the banks it will not be in a position to review the proposed merger before the termination date of April 30.
"The board of Hudson City needs more time to understand the nature and timing of the delay and its potential impact on the transaction before the board can determine its course of action," Hudson City Bancorp CEO Denis Salamone said in a statement.
About 4.2 million shares of Hudson City Bancorp were traded by 10:26 a.m., above the average trading volume of about 3.4 million a day.
TheStreet Ratings team rates HUDSON CITY BANCORP INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate HUDSON CITY BANCORP INC (HCBK) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- HCBK, with its decline in revenue, slightly underperformed the industry average of 5.5%. Since the same quarter one year prior, revenues slightly dropped by 5.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- 42.64% is the gross profit margin for HUDSON CITY BANCORP INC which we consider to be strong. Regardless of HCBK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HCBK's net profit margin of 12.39% is significantly lower than the industry average.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- Net operating cash flow has significantly decreased to $21.27 million or 75.15% when compared to the same quarter last year. Despite a decrease in cash flow of 75.15%, HUDSON CITY BANCORP INC is still significantly exceeding the industry average of -126.28%.
- HUDSON CITY BANCORP INC's earnings per share declined by 11.1% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, HUDSON CITY BANCORP INC reported lower earnings of $0.32 versus $0.38 in the prior year. For the next year, the market is expecting a contraction of 70.3% in earnings ($0.10 versus $0.32).
- You can view the full analysis from the report here: HCBK Ratings Report