NEW YORK ( TheStreet) -- Macatawa Bank Corporation (Nasdaq: MCBC) 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, impressive record of earnings per share growth and expanding profit margins. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

Highlights from the ratings report include:
  • Net operating cash flow has declined marginally to $5.96 million or 0.40% when compared to the same quarter last year. Despite a decrease in cash flow of 0.40%, MACATAWA BANK CORP is still significantly exceeding the industry average of -120.20%.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Commercial Banks industry and the overall market, MACATAWA BANK CORP's return on equity is below that of both the industry average and the S&P 500.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Commercial Banks industry average. The net income increased by 37.4% when compared to the same quarter one year prior, rising from $1.75 million to $2.40 million.
  • MACATAWA BANK CORP has improved earnings per share by 30.0% 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, MACATAWA BANK CORP continued to lose money by earning -$1.00 versus -$3.82 in the prior year. This year, the market expects an improvement in earnings ($0.14 versus -$1.00).
  • Powered by its strong earnings growth of 30.00% and other important driving factors, this stock has surged by 84.66% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.

Macatawa Bank Corporation operates as the holding company for Macatawa Bank that provides various commercial and personal banking services. The company has a P/E ratio of 10.5, below the average banking industry P/E ratio of 11.7 and below the S&P 500 P/E ratio of 17.7. Macatawa has a market cap of $82.6 million and is part of the financial sector and banking industry. Shares are down 25.6% year to date as of the close of trading on Wednesday.

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