NEW YORK (
) 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 good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.
Highlights from the ratings report include:
- SFNC's revenue growth trails the industry average of 20.7%. Since the same quarter one year prior, revenues slightly increased by 1.8%. 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.
- The gross profit margin for SIMMONS FIRST NATL CP is currently very high, coming in at 81.90%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.40% is above that of the industry average.
- 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. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, SIMMONS FIRST NATL CP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, SFNC has underperformed the S&P 500 Index, declining 16.63% 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.
- 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 15.5% when compared to the same quarter one year ago, dropping from $7.98 million to $6.75 million.
Simmons First National Corporation, through its subsidiaries, provides a range of banking products and services to individual and corporate customers in Arkansas, Missouri, and Kansas. The company has a P/E ratio of 10.5, equal to the average banking industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Simmons First has a market cap of $382.4 million and is part of the
industry. Shares are down 25.4% year to date as of the close of trading on Friday.
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