NEW YORK ( TheStreet) -- Monarch Financial Holdings (Nasdaq: MNRK) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, attractive valuation levels, expanding profit margins and notable return on equity. 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 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, MONARCH FINANCIAL HLDGS INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • The gross profit margin for MONARCH FINANCIAL HLDGS INC is currently very high, coming in at 84.90%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, MNRK's net profit margin of 7.10% significantly trails the industry average.
  • MONARCH FINANCIAL HLDGS INC has improved earnings per share by 23.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, MONARCH FINANCIAL HLDGS INC increased its bottom line by earning $0.75 versus $0.67 in the prior year. This year, the market expects an improvement in earnings ($0.79 versus $0.75).
  • The revenue growth came in higher than the industry average of 3.8%. Since the same quarter one year prior, revenues rose by 14.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.

Monarch Financial Holdings, Inc. operates as the bank holding company for Monarch Bank that provides various banking products and services for businesses, professionals, corporate executives, and individuals. The company has a P/E ratio of 9.7, equal to the average banking industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Monarch Financial has a market cap of $45.3 million and is part of the financial sector and banking industry. Shares are down 1.3% year to date as of the close of trading on Tuesday.

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