NEW YORK ( TheStreet) -- City Holding Company (Nasdaq: CHCO) has been downgraded by TheStreet Ratings from buy to hold. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and premium valuation. 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.
- CHCO, with its decline in revenue, underperformed when compared the industry average of 19.8%. 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.
- 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 reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in 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 ($2.56 versus $2.48).
- Net operating cash flow has decreased to $9.06 million or 27.44% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, CHCO has underperformed the S&P 500 Index, declining 9.76% from its price level of one year ago. 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.