NEW YORK ( TheStreet) -- Hampden Bancorp (Nasdaq: HBNK) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its expanding profit margins, notable return on equity and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and unimpressive growth in net income.

Highlights from the ratings report include:
  • HAMPDEN BANCORP INC reported flat earnings per share in the most recent quarter. 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, HAMPDEN BANCORP INC turned its bottom line around by earning $0.20 versus -$0.04 in the prior year. This year, the market expects an improvement in earnings ($0.28 versus $0.20).
  • The gross profit margin for HAMPDEN BANCORP INC is currently very high, coming in at 73.30%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.60% trails the industry average.
  • Despite the weak revenue results, HBNK has outperformed against the industry average of 20.6%. Since the same quarter one year prior, revenues slightly dropped by 5.9%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
  • The change in net income from the same quarter one year ago has exceeded that of the Thrifts & Mortgage Finance industry average, but is less than that of the S&P 500. The net income has decreased by 1.3% when compared to the same quarter one year ago, dropping from $0.54 million to $0.54 million.
  • Net operating cash flow has significantly decreased to -$0.85 million or 309.17% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

Hampden Bancorp, Inc. operates as the holding company for Hampden Bank that provides banking products and services to individuals, families, and businesses in Hampden county, Massachusetts. The company has a P/E ratio of 56.4, equal to the average banking industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Hampden has a market cap of $76.1 million and is part of the financial sector and banking industry. Shares are up 2.8% year to date as of the close of trading on Wednesday.

You can view the full Hampden Ratings Report or get investment ideas from our investment research center.
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