NEW YORK ( TheStreet) -- City National (NYSE: CYN) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow. Highlights from the ratings report include:
- CITY NATIONAL CORP has improved earnings per share by 12.8% 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, CITY NATIONAL CORP increased its bottom line by earning $2.36 versus $0.49 in the prior year. This year, the market expects an improvement in earnings ($3.29 versus $2.36).
- The gross profit margin for CITY NATIONAL CORP is currently very high, coming in at 92.90%. It has increased significantly from the same period last year. Along with this, the net profit margin of 16.20% is above that of the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, CITY NATIONAL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- CYN has underperformed the S&P 500 Index, declining 21.10% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- Net operating cash flow has significantly decreased to $24.67 million or 87.12% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.