Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model
NEW YORK (
-- LNB Bancorp
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive.
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Highlights from the ratings report include:
- Net operating cash flow has significantly increased by 161.52% to $3.66 million when compared to the same quarter last year. In addition, LNB BANCORP INC has also vastly surpassed the industry average cash flow growth rate of -60.08%.
- The gross profit margin for LNB BANCORP INC is currently very high, coming in at 78.50%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, LNBB's net profit margin of 8.18% significantly trails the industry average.
- Compared to its closing price of one year ago, LNBB's share price has jumped by 53.83%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Commercial Banks industry and the overall market, LNB BANCORP INC's return on equity is below that of both the industry average and the S&P 500.
- 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 significantly decreased by 26.0% when compared to the same quarter one year ago, falling from $1.51 million to $1.11 million.
LNB Bancorp, Inc. operates as the holding company for The Lorain National Bank that provides personal banking, mortgage and commercial banking, investment management, and trust services. The company has a P/E ratio of 16.5, below the S&P 500 P/E ratio of 17.7. LNB has a market cap of $85.9 million and is part of the financial sector and banking industry. Shares are up 56.4% year to date as of the close of trading on Friday.
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-- Written by a member of TheStreet Ratings Staff
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