NEW YORK ( TheStreet) -- Bbva Banco FrancesS.A (NYSE: BFR) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share. Highlights from the ratings report include:
- BFR's revenue growth trails the industry average of 21.5%. Since the same quarter one year prior, revenues slightly increased by 6.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- 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, BBVA BANCO FRANCES SA's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for BBVA BANCO FRANCES SA is currently very high, coming in at 79.60%. Regardless of BFR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BFR's net profit margin of 17.30% compares favorably to the industry average.
- Looking at the price performance of BFR's shares over the past 12 months, there is not much good news to report: the stock is down 39.88%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Commercial Banks industry. The net income has decreased by 7.5% when compared to the same quarter one year ago, dropping from $51.10 million to $47.27 million.