We've upgraded Bank of the Ozarks ( OZRK) from hold to buy, driven by its increase in net income, expanding profit margins, growth in earnings per share, good cash flow from operations and notable return on equity. 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. Net income increased by 7.2% when compared to the same quarter one year prior, rising from $8.40 million to $9.01 million and outperforming the S&P 500 and the commercial banks industry. Bank of the Ozarks' gross profit margin for is rather high at 52.30%, having increased from the same quarter the previous year, and its net profit margin of 18.10% is above that of the industry average. Net operating cash flow has significantly increased by 64.09% to $15.26 million when compared with the same quarter last year, but the company is still growing at a significantly lower rate than the industry average of 118.5%. Revenue declined 0.9% since the same quarter a year ago, but the declining revenue has not hurt the company's bottom line, with increasing earnings per share. EPS are up 6% in the most recent quarter compared with the same quarter a year ago. Stable earnings per share over the past two years indicate the company has sound management over its earnings and share float. During the past fiscal year, Bank of the Ozarks' EPS of $1.89 remained unchanged from the prior years' EPS of $1.89. This year, the market expects an improvement in earnings to $2.03.