NEW YORK ( TheStreet) -- Heritage Financial Corporation (Nasdaq: HFWA) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 3.1%. Since the same quarter one year prior, revenues rose by 13.6%. 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 gross profit margin for HERITAGE FINANCIAL CORP is currently very high, coming in at 75.50%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, HFWA's net profit margin of 9.30% significantly trails the industry average.
- Net operating cash flow has slightly increased to $5.21 million or 5.61% when compared to the same quarter last year. Despite an increase in cash flow of 5.61%, HERITAGE FINANCIAL CORP is still growing at a significantly lower rate than the industry average of 1651.58%.
- 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. When compared to other companies in the Commercial Banks industry and the overall market, HERITAGE FINANCIAL CORP's return on equity is below that of both the industry average and the S&P 500.
- HERITAGE FINANCIAL CORP's earnings per share declined by 20.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, HERITAGE FINANCIAL CORP turned its bottom line around by earning $1.00 versus -$0.14 in the prior year. For the next year, the market is expecting a contraction of 57.5% in earnings ($0.43 versus $1.00).