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, revenue growth, expanding profit margins, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.
Highlights from the ratings report include:
- INVESTORS BANCORP INC has improved earnings per share by 28.6% 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 two years. We feel that this trend should continue. During the past fiscal year, INVESTORS BANCORP INC increased its bottom line by earning $0.57 versus $0.22 in the prior year. This year, the market expects an improvement in earnings ($0.72 versus $0.57).
- Despite its growing revenue, the company underperformed as compared with the industry average of 21.7%. Since the same quarter one year prior, revenues rose by 12.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The gross profit margin for INVESTORS BANCORP INC is rather high; currently it is at 55.90%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.80% is above that of the industry average.
- Net operating cash flow has significantly increased by 52.21% to $33.22 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 8.51%.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
Investors Bancorp, Inc. operates as the holding company for Investors Savings Bank that provides a range of banking services in the United States. The company accepts deposits and originates loans. The company has a P/E ratio of 20.6, equal to the average banking industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Investors has a market cap of $1.5 billion and is part of the
industry. Shares are up 1.8% year to date as of the close of trading on Tuesday.
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