NEW YORK ( TheStreet) -- Orrstown Financial Services (Nasdaq: ORRF) has been downgraded by TheStreet Ratings from buy to hold. The company's strongest point has been its very decent return on equity which we feel should persist. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and feeble growth in the company's earnings per share. Highlights from the ratings report include:
- The share price of ORRSTOWN FINANCIAL SVCS INC has not done very well: it is down 12.37% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, ORRSTOWN FINANCIAL SVCS 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 significantly decreased by 372.1% when compared to the same quarter one year ago, falling from $3.90 million to -$10.62 million.
- ORRSTOWN FINANCIAL SVCS INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ORRSTOWN FINANCIAL SVCS INC increased its bottom line by earning $2.13 versus $1.98 in the prior year. For the next year, the market is expecting a contraction of 72.1% in earnings ($0.60 versus $2.13).
- ORRF, with its decline in revenue, slightly underperformed the industry average of 0.6%. Since the same quarter one year prior, revenues slightly dropped by 6.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.