NEW YORK ( TheStreet) -- ViewPoint Financial Group (Nasdaq: VPFG) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins, solid stock price performance, notable return on equity and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows weak operating cash flow. Highlights from the ratings report include:
- The gross profit margin for VIEWPOINT FINANCIAL GROUP is currently very high, coming in at 74.10%. 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 14.60% trails the industry average.
- 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, despite the company's weak earnings results. 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.
- VIEWPOINT FINANCIAL GROUP's earnings per share declined by 5.9% 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, VIEWPOINT FINANCIAL GROUP increased its bottom line by earning $0.54 versus $0.08 in the prior year. This year, the market expects an improvement in earnings ($0.67 versus $0.54).
- 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 Thrifts & Mortgage Finance industry and the overall market on the basis of return on equity, VIEWPOINT FINANCIAL GROUP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Despite the weak revenue results, VPFG has outperformed against the industry average of 20.7%. Since the same quarter one year prior, revenues fell by 10.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.