NEW YORK ( TheStreet) -- Home BancShares (Nasdaq: HOMB) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, HOME BANCSHARES INC underperformed against that of the industry average and is significantly less than that of 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 decreased by 1.3% when compared to the same quarter one year ago, dropping from $12.88 million to $12.72 million.
  • HOME BANCSHARES INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, HOME BANCSHARES INC reported lower earnings of $0.52 versus $1.02 in the prior year. This year, the market expects an improvement in earnings ($1.44 versus $0.52).
  • The gross profit margin for HOME BANCSHARES INC is currently very high, coming in at 82.10%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 24.10% is above that of the industry average.
  • The revenue growth greatly exceeded the industry average of 6.3%. Since the same quarter one year prior, revenues rose by 30.8%. 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.

Home BancShares, Inc. operates as a holding company for the Centennial Bank that provides various commercial and retail banking, and related financial products and services to businesses, real estate developers, investors, individuals, and municipalities. The company has a P/E ratio of 43.5, above the average banking industry P/E ratio of 42.7 and above the S&P 500 P/E ratio of 16.7. Home BancShares has a market cap of $631.9 million and is part of the financial sector and banking industry. Shares are down 0.6% year to date as of the close of trading on Thursday.

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