NEW YORK ( TheStreet) -- HF Financial Corp (Nasdaq: HFFC) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity. Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Thrifts & Mortgage Finance industry. The net income increased by 194.1% when compared to the same quarter one year prior, rising from $0.49 million to $1.44 million.
- The gross profit margin for HF FINANCIAL CORP is currently very high, coming in at 73.60%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 8.90% trails the industry average.
- HF FINANCIAL CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HF FINANCIAL CORP reported lower earnings of $0.10 versus $1.01 in the prior year. This year, the market expects an improvement in earnings ($1.15 versus $0.10).
- 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 Thrifts & Mortgage Finance industry and the overall market on the basis of return on equity, HF FINANCIAL CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
- HFFC has underperformed the S&P 500 Index, declining 9.83% 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.