NEW YORK ( TheStreet) -- Southern National Bancorp of Virginia (Nasdaq: SONA) 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, growth in earnings per share and increase in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • SONA has underperformed the S&P 500 Index, declining 17.31% 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.
  • Net operating cash flow has decreased to $3.71 million or 20.89% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • SONA, with its decline in revenue, slightly underperformed the industry average of 0.2%. Since the same quarter one year prior, revenues fell by 10.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • SOUTHERN NATIONAL BANCORP VA has improved earnings per share by 11.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SOUTHERN NATIONAL BANCORP VA reported lower earnings of $0.17 versus $0.27 in the prior year. This year, the market expects an improvement in earnings ($0.30 versus $0.17).
  • The gross profit margin for SOUTHERN NATIONAL BANCORP VA is rather high; currently it is at 63.50%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, SONA's net profit margin of 13.90% significantly trails the industry average.

Southern National Bancorp of Virginia, Inc. operates as the bank holding company for Sonabank, N. A., which provides commercial banking products and services to corporate and retail clients. The company has a P/E ratio of 38.8, above the average banking industry P/E ratio of 36.7 and above the S&P 500 P/E ratio of 17.7. Southern National Bancorp of Virginia has a market cap of $76.5 million and is part of the financial sector and banking industry. Shares are down 15.1% year to date as of the close of trading on Friday.

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