NEW YORK ( TheStreet) -- Ames National Corporation (Nasdaq: ATLO) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its expanding profit margins, good cash flow from operations and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:
  • ATLO has underperformed the S&P 500 Index, declining 8.35% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Commercial Banks industry average, but is greater than that of the S&P 500. The net income increased by 38.0% when compared to the same quarter one year prior, rising from $2.57 million to $3.55 million.
  • 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, AMES NATIONAL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Net operating cash flow has significantly increased by 201.24% to $3.83 million when compared to the same quarter last year. In addition, AMES NATIONAL CORP has also vastly surpassed the industry average cash flow growth rate of -591.71%.
  • The gross profit margin for AMES NATIONAL CORP is currently very high, coming in at 82.40%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 31.50% significantly outperformed against the industry average.

Ames National Corporation, a multibank holding company, provides commercial banking services primarily within the central Iowa counties of Boone, Marshall, Polk, and Story. The company has a P/E ratio of 15.1, above the average banking industry P/E ratio of 13.4 and below the S&P 500 P/E ratio of 17.5. Ames has a market cap of $172.7 million and is part of the financial sector and banking industry. Shares are down 15.4% year to date as of the close of trading on Wednesday.

You can view the full Ames Ratings Report or get investment ideas from our investment research center.