NEW YORK ( TheStreet) -- Oceanfirst Financial Corporation (Nasdaq: OCFC) 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 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 gross profit margin for OCEANFIRST FINANCIAL CORP is currently very high, coming in at 77.10%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 18.70% is above that of the industry average.
- OCEANFIRST FINANCIAL CORP' earnings per share from the most recent quarter came in slightly below the year earlier 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, OCEANFIRST FINANCIAL CORP increased its bottom line by earning $1.12 versus $1.02 in the prior year. This year, the market expects an improvement in earnings ($1.13 versus $1.12).
- 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, OCEANFIRST FINANCIAL CORP 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, OCFC has outperformed against the industry average of 23.4%. Since the same quarter one year prior, revenues slightly dropped by 9.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- After a year of stock price fluctuations, the net result is that OCFC's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.