NEW YORK ( TheStreet) -- City Holding Company (Nasdaq: CHCO) 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 growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity.

Highlights from the ratings report include:
  • In its most recent trading session, CHCO has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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'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, CITY HOLDING CO 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 slightly increased to $16.35 million or 7.73% when compared to the same quarter last year. Despite an increase in cash flow, CITY HOLDING CO's cash flow growth rate is still lower than the industry average growth rate of 43.41%.
  • The gross profit margin for CITY HOLDING CO is currently very high, coming in at 83.00%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 23.20% trails the industry average.

City Holding Company operates as the bank holding company for City National Bank of West Virginia that offers community banking services to consumers and local businesses. The company's deposit products comprise time, interest-bearing demand, savings, and non-interest bearing demand deposits. The company has a P/E ratio of 12.2, equal to the average banking industry P/E ratio and below the S&P 500 P/E ratio of 17.7. City Holding has a market cap of $465.6 million and is part of the financial sector and banking industry. Shares are down 15.6% year to date as of the close of trading on Tuesday.

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