NEW YORK ( TheStreet) -- Webster Financial (NYSE: WBS) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow. Highlights from the ratings report include:
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- WEBSTER FINANCIAL CORP reported significant earnings per share improvement 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. During the past fiscal year, WEBSTER FINANCIAL CORP turned its bottom line around by earning $0.60 versus -$1.25 in the prior year. This year, the market expects an improvement in earnings ($1.60 versus $0.60).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 86.8% when compared to the same quarter one year prior, rising from $22.69 million to $42.38 million.
- The gross profit margin for WEBSTER FINANCIAL CORP is currently very high, coming in at 82.70%. It has increased significantly from the same period last year. Along with this, the net profit margin of 19.30% is above that of the industry average.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, WEBSTER FINANCIAL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.