NEW YORK ( TheStreet) -- City Holding Company (Nasdaq: CHCO) has been upgraded by TheStreet Ratings from hold to buy. Among the primary strengths of the company is its expanding profit margins over time. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- The gross profit margin for CITY HOLDING CO is currently very high, coming in at 84.20%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 21.90% is above that of the industry average.
- CITY HOLDING CO's earnings per share declined by 5.9% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, CITY HOLDING CO reported lower earnings of $2.48 versus $2.69 in the prior year. This year, the market expects an improvement in earnings ($2.49 versus $2.48).
- CHCO, with its decline in revenue, underperformed when compared the industry average of 20.9%. Since the same quarter one year prior, revenues slightly dropped by 0.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- 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.
- After a year of stock price fluctuations, the net result is that CHCO's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Despite the stock's decline during the last year, it is still somewhat more expensive (in proportion to its earnings over the last year) than most other stocks in its industry. We feel, however, that other strengths this company displays offset this slight negative.