NEW YORK ( TheStreet) -- Pacific Mercantile Bancorp (Nasdaq: PMBC) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

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, PACIFIC MERCANTILE BANCORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • PMBC, with its decline in revenue, underperformed when compared the industry average of 0.5%. Since the same quarter one year prior, revenues fell by 14.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for PACIFIC MERCANTILE BANCORP is currently very high, coming in at 77.70%. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, PMBC's net profit margin of 13.10% significantly trails the industry average.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 1233.3% when compared to the same quarter one year prior, rising from $0.13 million to $1.68 million.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.

Pacific Mercantile Bancorp operates as the holding company for Pacific Mercantile Bank that provides banking services to small and medium-size businesses, professionals, and the general public primarily in Orange, Los Angeles, San Bernardino, and San Diego counties of California. Pacific Mercantile has a market cap of $47 million and is part of the financial sector and banking industry. Shares are up 21.3% year to date as of the close of trading on Tuesday.

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